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Manufacturing continues downward slide

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Official figures released this week show that companies plan to invest 25 per cent less in manufacturing in the next twelve months than they did for the previous year.

The Herald Sun reports that the figures were released by the Australian Bureau of Statistics (ABS). The 25 per cent capital expenditure (capex) drop for manufacturing was the worst for any sector.

The end of the mining boom resulted in a 13.6 per cent drop for the mining sector.

Figures for the economy as a whole show that corporate Australia is planning to invest $159 billion in the next 12 months, a decrease of 11.2 per cent on the previous year.

Commenting on the results, CommSec economist Savanth Sebastian said, "There is no doubt the slowdown in China and lower commodity prices have weighed on investment decisions. Outside of the mining sector, businesses remain cautious and refuse to invest. 

“But it was encouraging to see that the mining states were the backbone of the stronger investment story over the June quarter, with Western Australia and Queensland the only two states to record a lift in investment spending."

According to AAP, capex for manufacturing fell by nine per cent in the June quarter. This was the seventh quarterly fall in a row and manufacturing capex is now 30 per cent lower than it was at the start of the GFC five years ago.

The downward trend of investment in manufacturing has been going on for a long time.

When the ABS began releasing capex figures back in 1987/88 the value of manufacturing investment was just over two per cent of gross domestic product (GDP).  But the latest figures show that manufacturing investment now accounts for only 0.6 per cent of GDP.

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