Business investment has fallen for the second quarter in a row, weighed down by big falls in mining investment.
New private capital expenditure fell by 4.2 per cent in the March quarter following a 4.5 per cent fall in the last months of 2013, official figures show.
The closely-watched figures, released by the Australian Bureau of Statistics, cover investment in capital goods which includes such things as buildings and equipment.
Investment in the mining sector was down 8.7 per cent in the first three months of the year, after a five per cent fall in the December quarter.
National Australia Bank senior economist David de Garis said although the headline figure was worse than expected, the details of the report were encouraging.
"There was a big fall in mining investment which I don't think anyone would be surprised with but for manufacturing and other industries, investment was up, so that's somewhat reassuring," Mr de Garis said.
Businesses surveyed by the ABS say they are expecting to spend 12 per cent less on their businesses in 2014/15 than they were in 2013/13.
"It's still pointing to quite a big downturn but, nevertheless, came out stronger than expected, so there are some signs of life in the non-resource industries," Mr de Garis said.
"It's not yet filling the void but it's moving in the right direction."
"The RBA will be seeing this as another reason to stay on hold."
St George economist Janu Chan said there are signs that the economy's transition from one being driven by mining investment will be a bit smoother.
"The planned expenditure within mining is looking more positive, the fact that we're seeing this shift in growth drivers from mining to non-mining is encouraging," she said.
"The encouraging sign is that non-mining investment for next year looks to be better than it was in the previous release."
ANZ economist Dylan Eades said the outlook for the economy is looking a little better.
"Intentions continue to point to only a very gradual increase in non-mining investment, which continues to support our view that the Reserve Bank of Australia is likely to keep rates on hold for an extended period of time," he said.
St George economist Janu Chan said there are signs that the economy's transition from one being driven by mining investment will be a bit smoother.
"The planned expenditure within mining is looking more positive, the fact that we're seeing this shift in growth drivers from mining to non-mining is encouraging," she said.
"The encouraging sign is that non-mining investment for next year looks to be better than it was in the previous release."
ANZ economist Dylan Eades said the outlook for the economy is looking a little better.
"Intentions continue to point to only a very gradual increase in non-mining investment, which continues to support our view that the Reserve Bank of Australia is likely to keep rates on hold for an extended period of time," he said.
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