Capital investment lifts 6.4% over September quarter on data centre boom
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The news: Private new capital expenditure lifted 6.4% over the September quarter in seasonally adjusted terms amid growing investment in data centres and air transport.
The numbers: Capital expenditure lifted 6.9% higher on a year on year basis, reaching just under $49 billion.
Equipment, plant and machinery expenditure lifted 11.5% quarter on quarter to $23.59 billion, reflecting a 9.9% year on year increase.
Meanwhile, buildings and structures expenditure rose 2.1% quarter on quarter to $25.41 billion, reflecting a 4.3% year on year increase.
The information, media and telecommunications sector posted the biggest gains, 40.7% quarter on quarter and 69.8% year on year. This was followed by transport, postal and warehousing which was up 23.4% quarter on quarter and 24.2% year on year.
Professional, scientific and technical services fell 11.1% quarter on quarter and 10.1% year on year. Construction was down 1.7% quarter on quarter and down 28.7% year on year.
Forecast capital investment for 2025-26 lifted by 9.4% since the last estimate to $191.3 billion.
The context: ABS head of business statistics Tom Lay said that equipment, plant and machinery expenditure was mostly driven by the information, media and telecommunications sector, which was up 91.7% quarter on quarter.
For building and structures expenditure, Lay said this was driven by non-mining industries through large projects in manufacturing, accommodation and food services, and the information, media and telecommunications sectors.
The mining sector faced a drop in capital expenditure.
Before the release of the data, Morgan Stanley chief economist Chris Read told a media roundtable attended by Capital Brief that there is a “much better structural outlook for capex”. This is in part due to a lagged response to RBA interest rate cuts earlier in the year and state specific trends, such as the build out in Brisbane ahead of the 2032 Olympic games.
What they said: “These capital expenditure data can be volatile but given the need for investment to support cloud and future AI workloads, we suspect the rise in Q3 reflects a genuine lift; if we’re right there’s more to come,” Oxford Economics Australia lead economist Ben Udy said.
Udy also noted that an increase in future capital expenditure intentions “partly reflects the stronger than planned investment that has already taken place just in Q3, but it also signals that investment, especially on equipment and machinery is set to remain strong”.
The sources: ABS media release, ABS data, Oxford Economics statement
