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AAP

2013-02-28

A better-than-expected capital expenditure outlook is another sign the Reserve Bank of Australia won't need to cut the cash rate further.

New private capital expenditure figures released by the Australian Bureau of Statistics on Thursday show businesses have increased their planned investment spending for the current financial year.

The fifth estimate of expenditure for 2012/13 was $168.235 billion, which is 4.0 per cent higher than the fifth estimate for 2011/12, the Australian Bureau of Statistics (ABS) said.

The figures also showed capital expenditure fell 1.2 per cent in real terms, seasonally adjusted, in the December quarter of 2012, compared to market expectations of a 1.0 per cent rise.

HSBC Australia chief economist Paul Bloxham said that, while the December quarter figures were weaker than expected, the forward spending estimates suggested investment in the mining sector was unlikely to drop off following their peak.

"The fear out there was that you might get a projection which suggested you were going to get a sharp drop off in investment once the mining story peaked but these numbers suggest it is going to be more of a plateau than a peak," he said.

He said the figures meant the RBA was less likely to cut the cash rate below its current level of three per cent in 2013.

"I think its consistent with the idea that the RBA won't need to cut interest rates any further to achieve a rebalancing of the economy," he said.

"The RBA has time on their side, there's already a good deal of stimulus in the pipeline and investment is not about to drop off a cliff."