Total capital expenditure

IBISWorld expects total capital expenditure to decrease by 2.2% in 2024-25, reaching $608.7 billion, because of an anticipated 0.2% decline in private spending driven by several interrelated factors. According to the ABS, a 0.2% drop in private capital expenditure in Q4 2024 resulted from declines in equipment, plant and machinery, alongside a 0.6% decrease in mining spending. These figures underscore the cautious approach businesses adopt in response to the prevailing economic conditions, contributing to the overall downturn in capital expenditure. Also, rising economic uncertainty and cost-of-living pressures are causing companies to delay or reduce investment plans. At the same time, geographic disparities highlight uneven investment activity across regions like the ACT and South Australia, dampening private sector spending.

Over the past five years, total capital expenditure has increased, driven by strong growth in non-mining industries and infrastructure projects. Private capital expenditure, which constitutes more than three-quarters of total spending, has risen as a share of overall capital expenditure during this period. This growth reflects favourable financing conditions, government incentives and business confidence in sectors like construction and manufacturing. Also, geographic regions like New South Wales and Victoria have seen significant gains in private investment, supported by targeted policies and urban development initiatives. ABS highlights that increases in spending on equipment, plant, machinery and buildings contributed to this upwards trend, showcasing resilience in private sector investment despite recent economic uncertainties Overall, IBISWorld forecasts total capital expenditure to increase at a compound annual rate of 3.0% over the five years through 2024-25.