Overall, new business capital expenditure rebounded 3 per cent in the December quarter to $29.4 billion, beating economists’ expectations of a modest 1 per cent increase. Non-mining business investment increased by 2.5 per cent.
It was the first quarterly increase since 2019, and gave an early indicator that business capex plans were about to surge in 2021.
The latest quarterly figures, which are likely to be on the conservative side given the survey was taken before an even more optimistic monthly survey, indicates a strong March quarter GDP when official national accounts figures are released in the first week of June.
“In this quarter we hit an important milestone. Not only does it appear that activity continues to grow at a good pace but the capacity utilisation index now suggests that the level of activity is back around its pre-COVID level,” Mr Oster said.
“This is consistent with our forecast that GDP will have fully recovered in the March quarter.”
December quarter GDP left the economy 1.1 per cent below pre-COVID-19 levels but most of the big four bank economists expect that level was passed in the March quarter.
Mr Oster said that while a return to a pre-COVID-19 level of activity would be an important milestone, it would not be a case of “mission accomplished” as the economy would normally be expected to grow over time.
“That is why a very welcome aspect of the survey is the strength across all the leading indicators, which suggests that the recovery should continue at a relatively strong pace,” Mr Oster said.
Despite the optimistic outlook, the Business Council of Australia’s chief executive, Jennifer Westacott, said the government needed to do more.
“The budget needs to empower the private sector to do the heavy lifting in the economy so business can get on with creating new jobs, getting people back to work and investing,” Ms Westacott said.
“One of the main roadblocks to success is the shockingly low rates of business investment. As a share of the economy, business investment is at a 28-year low.
“We need to do everything we can to encourage big companies to make the large investments that will transform the economy, set us up for growth and help small businesses.”