Spending outlook gives dollar a lift
The dollar has recovered slightly after slumping to an almost three-month low on Thursday, following better-than-expected business spending figures that reduced the odds of further interest rate cuts.
The lift in companies' spending expectations for this financial year, as well as a 3.6 per cent rise in business investment for the September quarter, raised hopes non-mining sectors of the economy were showing signs of life, analysts said.
The dollar fell as low as US90.65¢ on Thursday but gained about three-quarters of a cent to to US91.40¢ after the figures were released. The dollar also strengthened against the pound and the euro.
It was buying US91.28¢, 67.2 euro cents and 55.95p in late trade.
"In terms of the planned investment outlook, this data is probably as good as you could have hoped for," Macquarie Bank senior economist Brian Redican said. "Overall expectations have remained fairly steady, and that's actually a good thing - that there haven't been future downgrades over the last three months."
The fourth estimate for 2013-14 spending expectations rose 3.2 per cent from the third estimate to $166.8 billion. It was 2 per cent lower than the fourth estimate for the previous corresponding period.
Spending on buildings and structures grew by 6.3 per cent in the September quarter but fell by 1.5 per cent on equipment, plant and machinery, the fourth consecutive quarter of contraction.
Manufacturing investment grew by 2.5 per cent in the three months to September, but remained weak.
Total new capital expenditure for the quarter was $40.9 billion. Economists had expected a slide of 1.2 per cent in the third quarter after a 4 per cent lift in the June quarter.
The latest figures showed there were tentative signs of a growth rotation away from the resources sector, JPMorgan economist Tom Kennedy said, adding that the Reserve Bank would be cheered by the encouraging data.
"If you look at manufacturing and other selected industries, those two components in a proportional sense recorded larger increases," he said.
"There's signs that RBA rate cuts are starting to work and we are started to see signs of life outside the mining sector.
"But we need to see that continue and also accelerate over the coming quarters for that to unfold in a meaningful way to satisfy the objectives of the central bank."
Economists said the Reserve Bank appeared likely to remain on hold when its board meets on Tuesday for the last time this year.
Financial markets were pricing in an 8 per cent chance of a cut to the cash rate next week, but pushed back forecasts of the first rate rise since November 2011 from June to July. Investors rated the prospect of a July 2014 cut at 6 per cent.