Australian markets are braced for an important quarterly reading on corporate investment on Thursday that could help reveal just how fast the mining boom is cooling, and whether other business sectors are stepping up to fill the gap.
All eyes will be on the Australian Bureau of Statistics' updated survey of investment plans for 2013-14 following a worrying downturn in the second quarter.
The survey was taken over October and November, just as business confidence got a big boost from the election of a conservative government, but spending plans can be slow to change.
"A key uncertainty is whether non-mining business investment will pick up sufficiently to assist in the rebalancing of growth," said Dylan Eades, an economist at ANZ. "Despite the recent uplift in business confidence, we think that it's too early for this improvement to have been translated into an upgrade in non-mining business investment intentions."
Mining investment has been the main driver of economic growth in the past few years, reaching 8 per cent of Australia's annual gross domestic product of $1.5 trillion. That compares with a historical average of less than 2 per cent.
But spending by miners is expected to fall sharply over the next few years, putting the onus on the rest of business to pick up the slack.
Analysts polled by Reuters predict total investment fell by an inflation-adjusted 1.2 per cent in the third quarter, from the previous quarter when it jumped 4 per cent.
This series is hard to forecast with any certainty, however, and estimates ranged from a 6 per cent drop to a 2 per cent rise.
For all of 2013-14, the median forecast was for planned spending to amount to $160 billion, up just marginally from a previous $159.2 billion. Again, however, uncertainty is high.
"Firms usually upgrade their spending at this stage of the planning cycle, but we expect a roughly 4 per cent downgrade, to $154 billion," said Kieran Davies, chief economist at Barclays.
"That would be consistent with a 10 per cent decline in nominal business investment this financial year."
Such an outcome could revive speculation about another cut in interest rates from the Reserve Bank of Australia and would likely knock the local dollar lower.
The central bank has been on hold since cutting rates to a record low of 2.5 per cent in August, judging that its easing was having the desired effect on house prices and home building, as well as consumer and business confidence.
David Mousina, an economist at CBA, noted the ABS survey had tended to underestimate investment across the economy since it omitted a range of important industries including agriculture, healthcare and social assistance, and education and training.
"Capital spending in these excluded industries has been robust over recent periods," he said. "As well, current levels of commercial finance approvals are turning up, which has historically been a good indicator of non-mining investment activity."
There was plenty of scope for expansion as investment outside of mining had fallen to its lowest share of GDP since 1994, added Mr Mousina.