A capital surprise gives the RBA room not to move

Unexpectedly strong capital expenditure and a slower-than-expected decline in mining investment will put less pressure on the Reserve Bank to provide relief to the non-mining sector.

Capital expenditure was surprisingly strong in the September quarter and the investment outlook has been revised up. But the rebalancing of the Australian economy still has a way to go yet before it becomes sustainable and the Reserve Bank will likely leave rates on hold for some time.

Capital expenditure in the September quarter was much stronger than the market expected, rising by 3.6 per cent to be 0.7 per cent lower over the year.

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