Australia’s business investment data released on Thursday has raised concerns on the economic performance as constraints of falling mining investments are shadowing the economic growth.

The report has the potential to perturb the Reserve Bank of Australia, the prime minister and the treasurer. As mining boom retreated, the non-mining sector of the economy has not shaped up to fill its vacuum and engulf it with investments.

Business investment in Australia suffered the biggest quarterly fall in the 28-year history of the survey with business investment languishing at a four and half year low, the update added.

Deutsche Bank reaction

Reacting to the report, Adam Boyton, Deutsche Bank Australia’s chief economist described the data as “a very weak outcome”. According to him, non-mining investment is the 'missing link' in Australia’s growth outlook, reports the Business Insider.

Boyton’s note says the non-mining investment seemed to have plumbed after mining subsided. The report as a whole highlighted the investment plight. In the September quarter, Australian business investment plunged 9.2 percent to $31.4 billion, which was the lowest ever quarterly investment since the March quarter of 2011.

It indicated that investment decisions for 2015/16 are 20.9 percent lower than the estimates for 2014/15, with the main causative factor being decrease in mining. Perhaps the only silver lining is that businesses may jointly spend $120.4 billion in the 2015/16 financial year, that will be more than four percent than the estimates made previously.

Role for services

JP Morgan chief economist Stephen Walters said the September quarter investment figures are a drag on the upcoming economic growth data, said a report from SBS News.

“The mining capex is plunging, that's not a surprise but there's just not enough lift in those other bits of the economy,” he said and aded that it might be optimistic to think that manufacturing would be providing the lift with carmakers and steelmakers throwing in their support.

Walters said the time has come for services to play a more serious part in the economy and stimulate spending.

“It's happening but it is a very slow rotation,” he said.

The National Bank's business survey had affirmed business conditions in the economy will be strong and the non-mining sector can leverage the solid conditions for trading and profitability by increasing investment intentions.

The Business Insider report adds that businesses do not invest if they lack confidence. So, the problem boils down to waning investor confidence. Malcolm Turnbull took up the PM post saying businesses needed to have more confidence. It seems, after the political success that followed the PM, has a task cut out to bring back that business confidence as the new data on investment seriously demands it.

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