Business investment contracted sharply in the March quarter, as non-mining expenditure again failed to much of the slack left by Australia's resources downturn.
The Australian Bureau of Statistics said on Thursday that private sector March-quarter capital expenditure on buildings, equipment, plant and machinery shrunk 5.2 per cent, seasonally adjusted, from the previous three months, leaving it down 15.4 per cent year-on-year.
The fall follows a surprise improvement in the December quarter.
Mining investment, however, was down 12 per cent for the March quarter, and manufacturing fell more than 10 per cent. Outside these traditional areas, there was a 1.8 per cent pick-up in capital expenditure.
Total non-mining investment, however, fell 0.4 per cent quarter-on-quarter but was up 0.7 per cent year-on-year.
The March contraction was worse than the 3.5 per cent average forecast from a Bloomberg survey of economists.
The Australian dollar dipped about one-fifth of a US cent before bouncing back as traders took heart from a pick-up in investment plans. In late local trade the Aussie was buying about US72.04¢, compared with around US72.16¢ at the same time on Wednesday.
Capital expenditure includes investment in new buildings and other structures, as well as equipment, plant and machinery.
Demand from China for raw materials helped drive massive investment in new mines and related infrastructure in the years leading up to a 2012-13 peak.
Most of these projects have since moved into pure production, meaning capital expenditure has fallen sharply.
Thursday's survey also included the second estimate for projected spending in the 2016-17 financial year.
This was better than expected, up 6.3 per cent on the first estimate, at $89.2 billion. However, it was still nearly 15 per cent down on the same estimate this time last year.
Capital Economics' chief economist for Australia Paul Dales said the latest data wasn't "quite as bad as it looks" after the surprise bounce in the December quarter.
However, he noted the sharp drop in manufacturing, "which should be helped by the weaker dollar".
"This survey does exclude the stronger parts of the economy, such as health and education," he said.
"Even so, the transition from mining to non-mining investment is taking longer than widely hoped."
Economists were divided on whether or not the investment result would translate into a drag on first-quarter gross domestic product growth, which is published next week.
"The lacklustre capex data implies a larger drag on first-quarter GDP by business investment than previously anticipated," said Commonwealth Bank senior economist John Peters.
"However, the caveat is that historically the quarterly capex data has been a poor predictor of the quarterly business investment component in the GDP print," he said.
