Wayne Cole

SYDNEY (Reuters – Australian business investments fell in the 3rd quarter because of pandemic lockdowns that shut down many Australian firms. But future spending plans turned out to be remarkably resilient, and a swift recovery is possible now that all restrictions have been removed.

The Australian Bureau of Statistics released figures on Thursday showing that capital expenditure decreased by 2.2% to A$32.7 Billion ($23.57 Billion) in the third quarter, in line with market expectations of a drop of 2.0%.

A$138.6 million was spent on the year ended June 2022, an increase above the estimates of most analysts and a signal that the business has recovered from the disruptions.

Sarah Hunter (chief economist at BIS Oxford Economics) stated, “It implies that spending this fiscal year will be more than 10% higher than fiscal 2021,”

“Construction and wholesale trade, transport, mail and warehousing were the leaders in the transformation to online shopping.

The largest investment pullback for the third quarter was in plant and machine, with the retail sector and education industries particularly badly affected by the lockdowns.

Due next week, data on gross domestic product will show a significant contraction due to the fact that stay-at home rules in Sydney and Melbourne have hammered consumption over the past quarter.

With 86% of adults fully vaccinated the restrictions have been lifted and shopping has soared as retailers look forward to a record Black Friday.

Separate data from payrolls was released on Thursday. It showed that employment rose sharply over the past two weeks of Oct., which rounded out an excellent month for Victoria and New South Wales.

There has been no significant increase in job growth, which slowed to 2.2% annually in the third-quarter. That is still well below inflation at 3%.

The Reserve Bank of Australia (RBA) is not happy with this slow pace. They want to see wages growing at at least 3% before they trigger rate increases. This it doesn’t expect will happen before 2023.

Investors think the bank has fallen behind in inflation. They believe they will need to increase the 0.1% cash rate before June 2020, just to match other central banks.

The Reserve Bank of New Zealand, (RBNZ), raised Wednesday its rate for the second consecutive month and indicated that it would continue to rise to 1.5% by 2022.

($1 = 1.3881 Australian dollars)