Australia’s business investment outlook for FY26

• Private sector capital expenditure increased by a modest 0.2% q/q in Q2. Spending on machinery & equipment and on new buildings & structures both increased. The non-mining sector drove growth in the quarter, more than offsetting a contraction in mining investment.

• Today’s data are an encouraging sign that heightened economic uncertainty did not take too much of a toll on Australian businesses in Q2. Nevertheless, some of these impacts may come through with a lag. Firms’ expectations for next year’s spending have been wound back a little and point to very little growth in business investment in FY26.

Chart 1: FY26 investment intentions are looking soft