In a remarkable turn of events, Australian business investment has achieved an unprecedented high during the fiscal year 2022-23, with the final quarter of the financial year marking the strongest quarterly performance in over a decade. Amidst the challenging backdrop of the pandemic and supply chain disruptions, key sectors have shown impressive resilience.
Newly released data from the Australian Bureau of Statistics (ABS) on Thursday unveiled a 10.8% surge in private capital expenditure (capex) over the year ending in June, reaching a record $165.1 billion—surpassing the $142.4 billion figure recorded in 2021-22. Despite this impressive increase, the growth rate was lower than the remarkable 15.9% reported in the previous fiscal year, which was driven by the post-pandemic recovery surge.
The year 2022-23 witnessed a rebound from the pandemic-driven fall in investment during 2020-21, which had plummeted to $125 billion. The comparison to 2019-20 ($127 billion) and 2018-19 ($133 billion) showcases the pandemic's significant impact on corporate spending.
During the June quarter, growth exceeded expectations with a robust 2.8%, building on a revised rate of 3.7% from the previous March quarter, originally reported as a 2.4% increase. Notably, the June quarter figure of $37.58 billion marked the highest value recorded since late 2015.
The stellar performance of the construction industry played a pivotal role in this surge, witnessing a remarkable 30.5% rise in total capex after enduring substantial declines in the previous two quarters. This resurgence was attributed to small businesses finally receiving vehicles and construction machinery following extended delivery delays.
ABS Head of New Capital Expenditure Statistics, Robert Ewing, highlighted the contributing factors to the June quarter's positive outcome. He noted that businesses increased investments in new equipment and machinery by 1.9%, reflecting a gradual improvement in supply chain disruptions, especially in vehicle availability. Additionally, some businesses accelerated investment plans ahead of the expiration of the temporary full expensing tax incentive on June 30.
Ewing further elaborated that the upsurge in building and structure investments was driven by mining projects focused on resources like lithium for batteries. Moreover, previously delayed projects in non-mining industries also contributed to this growth.
While the growth rate may have slowed when compared to the previous fiscal year, the context of the pandemic-induced disruptions and the complex dynamics of inflation-adjusted investment spending need to be taken into account. Despite these challenges, Australian business investment has demonstrated remarkable resilience and potential for growth, even in the face of ongoing uncertainties.
