Some good news amid Australia's capex decline

Despite the collapse in mining investment driving a fall in new capital expenditures, an expected increase in investment in the services sector is an encouraging sign for the economy.

Mining and manufacturing investment is set to fall sharply in the 2014-15 financial year but the outlook for the economy appears to have improved. Though there remains considerable uncertainty and significant risks in the form of iron ore and China, it appears likely that the non-mining sector will provide enough support to keep the Australian economy growing at a solid (if unspectacular) pace over the next couple of years.

New capital expenditure fell by 4.2 per cent in the March quarter, weaker than market expectations of a more modest decline, to be 5 per cent lower over the year. This followed a similarly weak result in the December quarter.

Graph for Some good news amid Australia's capex decline


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