The Australian Bureau of Statistics has revealed sobering data on business activity.

Business investment has fallen by 4.4 per cent to the March quarter. While capital expenditure fell by 2.2 per cent. This is a harrowing result considering economists were bracing for a 2.4 per cent slump in business investment and 1.6 per cent in capital investment.

The figures (which included investment in capital goods like equipment and buildings) pointed to a marked slowing in investment in the immediate future.

Diana Mousina, an economist for the Commonwealth Bank of Australia, described the figures as ‘pretty disappointing’, especially for mining investment.

“On the mining side it’s indicating a much larger drop off. That’s a little bit weaker than what the RBA is thinking at the moment.

“There’s definitely the risk that we might see another rate cut if we don’t see enough of a pick-up in other parts of the economy.”

The confluence of weak business investment and slowing growth in China’s economy has the world bracing itself for another recession. Still positive interest rates in Australia give the RBA some room to move; but attempts at business stimulation through rate cuts clearly haven’t worked so far.

Because of this, market expectations are that the RBA will keep rates on hold when they meet next Tuesday.

The latest capital expenditure data shows that spending on capital goods is expected to be down 8.1 per cent on last year (a measly $149.9 billion).

The news is expected to only worsen, with predictions of $104.0 billion being spent in 2015/16.

David de Garis, a senior economist with the NAB, said that small upgrades in non-mining related businesses hadn’t been able to offset the overall investment plunge.

“It’s probably what the Reserve Bank expected to see when they cut interest rates twice this year,” he said.

But Mr de Garis believed industries not accounted for in Thursday’s release would be able to kick off a recovery in late 2015.

“Other indicators (as in housing and retail) have been more encouraging than today’s release.

“We’ve seen retail sales have been a bit better. We’ve seen the labour market show some sense of stability and the NAB business survey is also showing some signs of improvement.”

Mr de Garis agreed with the market expectation of a rate hold. He believed the RBA would be more interested in seeing how much more effect the February and May cuts did before moving again on the economy.

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