CANBERRA: Australian business investment fell by 4 percent in the June quarter, worse than the 2.5 percent market expectations, official figures released by the Australian Bureau of Statistics on Thursday show.
A strong 6.8 per cent rise for manufacturing-related construction and 7.4 per cent for other industries could not offset the resources slump. However, this figure is 23.4 per cent lower than the equivalent forecast a year earlier, and the weakest outlook in five years.
However, when looking at the 12 months to June, the value of new residential construction work done had improved by 10.6% across the country, largely due to more significant improvements in the value of residential work completed in New South Wales, Queensland, South Australia and Tasmania.
Traders are pricing in about a 15 percent chance of a rate cut next week. The recent plunge in Chinese stocks has added to fears that economic growth in the world’s second biggest economy will slow further still, dampening demand for Australia’s key commodity exports such as iron ore. This should keep the door ajar for another interest rate cut and interbank futures are fully priced for a quarter point easing by Christmas.
Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney. The central bank holds its September meeting next week but is considered nearly certain to hold rates steady.
