Investment outlook weakens

While some of the latest data have suggested that economic activity in Australia has accelerated since the turn of the year, the bigger picture is that the economy is still struggling to cope with the end of the mining boom. Weaker than expected capital expenditure plans for 2015/16 suggest that non-mining investment will not fill the hole left behind by further falls in mining investment. We believe this deteriorating outlook for investment will play a part in prompting the RBA to cut interest rates to 1.5% by December.