Capex resilient despite data‑centre pullback
Private capex surprised on the upside, growing 0.4%qtr and 7.8%yr in the December quarter 2025. Investment in buildings and structures continued to provide broad based support, while the earlier strength in machinery and equipment attributed to information media and telecommunications unwound and was partly offset by a pickup elsewhere in the non-mining sector.
Private capex surprised on the upside, growing by 0.4%qtr and 7.8%yr in the December quarter 2025, the largest year‑ended increase since the September quarter 2012 (excluding COVID). This outcome exceeded both Westpac Economics’ expectation of a 0.5%qtr decline and the flat profile anticipated by market consensus.
The headline result masked a divergence across asset types. Investment in buildings and structures rose by 2.3%qtr, with gains broad‑based across non‑mining industries. In contrast, investment in machinery and equipment declined by 1.7%qtr, driven primarily by a sharp pullback in spending on data‑centre related equipment. Accommodation and food services also recorded sizeable declines in this segment, while investment linked to the energy transition provided some offset. Indeed, excluding the impact of data‑centre‑related capex, non‑mining investment in machinery and equipment increased a healthy 3.0% in Q4 2025.
Looking ahead, capex plans suggest that current investment levels are likely to be broadly sustained over the remaining two quarters of FY2026, pointing to an inflation‑adjusted (or real) lift of around 7.6%yr (year‑average terms). The first capex expectation for FY2027 also points to further growth, albeit at a more moderate pace.
What does this mean for next week’s National Accounts?
Today’s capex numbers, coupled with yesterday’s construction work done outcome, point to small downside risks to our Q4 GDP nowcast (a full update will be released tomorrow). Despite this, partials to date are consistent with ongoing momentum in domestic demand through Q4, rather than a renewed slowdown.
What about inflationary pressures?
The machinery deflator has softened for a third consecutive quarter, falling by around 2.4% in six‑month annualised terms. This likely reflects, in part, changing trade patterns and excess capacity in China, where producer prices have been in deflation for two years. This disinflationary impulse should help keep domestic inflationary pressures contained going forward, while also encouraging businesses to continue investing in their capital stock.
Industry detail
Mining capex struggled, declining by 0.8%qtr and erasing most of the gains of the September quarter. Buildings and structures fell by a milder 0.2%qtr, while machinery and equipment recorded a larger 2.3%qtr decline. This result was broadly anticipated consistent with the weaker quarter-ahead investment intentions reported in the September survey.
Non-mining capex rose 0.8%qtr to be 10.6% higher in year-ended terms – largest year-ended increase since Q4 2014 (outside of COVID). Strength was derived from buildings and structures which grew by 3.7%qtr, while machinery and equipment reversed course, falling by 1.7%qtr and acting as a drag on the headline figure.
At the industry level, arts and recreation was a clear standout, with capex surging 23.4%qtr following a strong 10.1%qtr increase in September. Other services also performed well, reversing course from three consecutive quarters of decline to grow 17.6%qtr. Notably structural industries linked with the energy transition rebounded sharply this quarter - electricity, gas, water and waste rose 8.9%qtr, while professional, scientific and technical services grew by 14.1%qtr.
Despite quarter‑to‑quarter volatility, the recent trend remains clear: structurally driven industries have been the major source of capex growth, with investment in data centres/IT equipment and the energy transition driving recent gains.
Separately, we have been looking for evidence that firmer private domestic demand is supporting investment in more cyclically sensitive sectors. On this front, today’s data provided more encouraging signals building on the September quarter results. Retail trade capex rose 4.3%qtr, while construction recorded a stronger 8.1%qtr increase, although the latter likely still reflects some structural support. While wholesale trade, accommodation and food services, and transport posted declines this quarter, these falls were insufficient to unwind the September quarter gains, and these industries remain elevated in year‑ended terms.
Capex spending plans
Alongside the capex data, the ABS also publishes businesses spending plans for this financial year, which allows us to assess how the capex spending is likely to evolve over the coming quarters. Usually, those plans tend to have a bias, with companies first estimates usually erring on the side of caution. Over time, business tend to revise their plans higher. We apply a methodology, that takes historical ratios of plans to actuals alongside business conditions which allows us to derive a more realistic capex estimate in the year ahead.
Unadjusted estimate 5 for the current financial year brought no surprises coming in at $199bn - matching our expectations. This estimate incorporates actual spending in the first two quarters of the financial year and represents an 8.6% increase on a year ago, as well as a 4.3% upward revision from Estimate 4. Given the historic evolution of these estimates, they imply FY2026 nominal capex spending of around $206bn, which would imply a sizeable 8.9%yr increase over the previous financial year.
Estimate 1 for FY2027 came in at $158bn, a 7.3% increase over the equivalent estimate a year ago. While below the double-digit expectations growth across FY2023-25, it marks a clear step-up from the 1.5% observed for FY2026, suggesting firms are expecting the firm investment growth momentum to be maintained beyond this financial year.
Price effects usually play an important role in the capex plans, as they are provided in nominal terms. The capex deflator has been signalling easing inflationary pressures after the pandemic, growing 2.1%yr this quarter – down from the double-digit growth rates recorded in 2022. We believe the deflator will soften throughout the remainder of the year, resulting in full year average growth of 1.7%yr. Alongside an 8.9%yr nominal growth implied by the capex plans, the deflator estimate implies 7.1%yr real capex growth, a minor upward revision from our previous expectation of 7.0%yr growth.
Stay informed with Westpac IQ
Get the latest reports straight to your inbox.
Related articles
Australia and NZ Weekly 23 February 2026
Australia and NZ Weekly 23 February 2026
Browse topics
Disclaimer
©2026 Westpac Banking Corporation ABN 33 007 457 141 (including where acting under any of its Westpac, St George, Bank of Melbourne or BankSA brands, collectively, “Westpac”). References to the “Westpac Group” are to Westpac and its subsidiaries and includes the directors, employees and representatives of Westpac and its subsidiaries.
Things you should know
We respect your privacy: You can view the New Zealand Privacy Policy here, or the Australian Group Privacy Statement here. Each time someone visits our site, data is captured so that we can accurately evaluate the quality of our content and make improvements for you. We may at times use technology to capture data about you to help us to better understand you and your needs, including potentially for the purposes of assessing your individual reading habits and interests to allow us to provide suggestions regarding other reading material which may be suitable for you.
This information, unless specifically indicated otherwise, is under copyright of the Westpac Group. None of the material, nor its contents, nor any copy of it, may be altered in any way, transmitted to, copied of distributed to any other party without the prior written permission of the Westpac Group.
Disclaimer
This information has been prepared by Westpac and is intended for information purposes only. It is not intended to reflect any recommendation or financial advice and investment decisions should not be based on it. This information does not constitute an offer, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter into a legally binding contract. To the extent that this information contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs and before acting on it you should consider the appropriateness of the advice. Certain types of transactions, including those involving futures, options and high yield securities give rise to substantial risk and are not suitable for all investors. We recommend that you seek your own independent legal or financial advice before proceeding with any investment decision.
This information may contain material provided by third parties. While such material is published with the necessary permission none of Westpac or its related entities accepts any responsibility for the accuracy or completeness of any such material. Although we have made every effort to ensure this information is free from error, none of Westpac or its related entities warrants the accuracy, adequacy or completeness of this information, or otherwise endorses it in any way. Except where contrary to law, Westpac Group intend by this notice to exclude liability for this information. This information is subject to change without notice and none of Westpac or its related entities is under any obligation to update this information or correct any inaccuracy which may become apparent at a later date. This information may contain or incorporate by reference forward-looking statements. The words “believe”, “anticipate”, “expect”, “intend”, “plan”, “predict”, “continue”, “assume”, “positioned”, “may”, “will”, “should”, “shall”, “risk” and other similar expressions that are predictions of or indicate future events and future trends identify forward-looking statements. These forward-looking statements include all matters that are not historical facts. Past performance is not a reliable indicator of future performance, nor are forecasts of future performance. Whilst every effort has been taken to ensure that the assumptions on which any forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from any forecasts.
Conflicts of Interest: In the normal course of offering banking products and services to its clients, the Westpac Group may act in several capacities (including issuer, market maker, underwriter, distributor, swap counterparty and calculation agent) simultaneously with respect to a financial instrument, giving rise to potential conflicts of interest which may impact the performance of a financial instrument. The Westpac Group may at any time transact or hold a position (including hedging and trading positions) for its own account or the account of a client in any financial instrument which may impact the performance of that financial instrument.
Author(s) disclaimer and declaration: The author(s) confirms that (a) no part of his/her compensation was, is, or will be, directly or indirectly, related to any views or (if applicable) recommendations expressed in this material; (b) this material accurately reflects his/her personal views about the financial products, companies or issuers (if applicable) and is based on sources reasonably believed to be reliable and accurate; (c) to the best of the author’s knowledge, they are not in receipt of inside information and this material does not contain inside information; and (d) no other part of the Westpac Group has made any attempt to influence this material.
Further important information regarding sustainability-related content: This material may contain statements relating to environmental, social and governance (ESG) topics. These are subject to known and unknown risks, and there are significant uncertainties, limitations, risks and assumptions in the metrics, modelling, data, scenarios, reporting and analysis on which the statements rely. In particular, these areas are rapidly evolving and maturing, and there are variations in approaches and common standards and practice, as well as uncertainty around future related policy and legislation. Some material may include information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. There is a risk that the analysis, estimates, judgements, assumptions, views, models, scenarios or projections used may turn out to be incorrect. These risks may cause actual outcomes to differ materially from those expressed or implied. The ESG-related statements in this material do not constitute advice, nor are they guarantees or predictions of future performance, and Westpac gives no representation, warranty or assurance (including as to the quality, accuracy or completeness of the statements). You should seek your own independent advice.
Additional country disclosures:
Australia: Westpac holds an Australian Financial Services Licence (No. 233714). You can access Westpac’s Financial Services Guide here or request a copy from your Westpac point of contact. To the extent that this information contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs and before acting on it you should consider the appropriateness of the advice.
New Zealand: In New Zealand, Westpac Institutional Bank refers to the brand under which products and services are provided by either Westpac (NZ division) or Westpac New Zealand Limited (company number 1763882), the New Zealand incorporated subsidiary of Westpac ("WNZL"). Any product or service made available by WNZL does not represent an offer from Westpac or any of its subsidiaries (other than WNZL). Neither Westpac nor its other subsidiaries guarantee or otherwise support the performance of WNZL in respect of any such product. WNZL is not an authorised deposit-taking institution for the purposes of Australian prudential standards. The current disclosure statements for the New Zealand branch of Westpac and WNZL can be obtained at the internet address www.westpac.co.nz.
Singapore: This material has been prepared and issued for distribution in Singapore to institutional investors, accredited investors and expert investors (as defined in the applicable Singapore laws and regulations) only. Recipients of this material in Singapore should contact Westpac Singapore Branch in respect of any matters arising from, or in connection with, this material. Westpac Singapore Branch holds a wholesale banking licence and is subject to supervision by the Monetary Authority of Singapore.
Fiji: Unless otherwise specified, the products and services for Westpac Fiji are available from www.westpac.com.fj © Westpac Banking Corporation ABN 33 007 457 141. This information does not take your personal circumstances into account and before acting on it you should consider the appropriateness of the information for your financial situation. Westpac Banking Corporation ABN 33 007 457 141 is incorporated in NSW Australia and registered as a branch in Fiji. The liability of its members is limited.
Papua New Guinea: Unless otherwise specified, the products and services for Westpac PNG are available from www.westpac.com.pg © Westpac Banking Corporation ABN 33 007 457 141. This information does not take your personal circumstances into account and before acting on it you should consider the appropriateness of the information for your financial situation. Westpac Banking Corporation ABN 33 007 457 141 is incorporated in NSW Australia. Westpac is represented in Papua New Guinea by Westpac Bank - PNG - Limited. The liability of its members is limited.
U.S.: Westpac operates in the United States of America as a federally licensed branch, regulated by the Office of the Comptroller of the Currency. Westpac is also registered with the US Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer, but is neither registered as, or affiliated with, a Futures Commission Merchant registered with the US CFTC. The services and products referenced above are not insured by the Federal Deposit Insurance Corporation (“FDIC”). Westpac Capital Markets, LLC (‘WCM’), a wholly-owned subsidiary of Westpac, is a broker-dealer registered under the U.S. Securities Exchange Act of 1934 (‘the Exchange Act’) and member of the Financial Industry Regulatory Authority (‘FINRA’). In accordance with APRA's Prudential Standard 222 'Association with Related Entities', Westpac does not stand behind WCM other than as provided for in certain legal agreements between Westpac and WCM and obligations of WCM do not represent liabilities of Westpac.
This communication is provided for distribution to U.S. institutional investors in reliance on the exemption from registration provided by Rule 15a-6 under the Exchange Act and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors in the United States. WCM is the U.S. distributor of this communication and accepts responsibility for the contents of this communication. Transactions by U.S. customers of any securities referenced herein should be effected through WCM. All disclaimers set out with respect to Westpac apply equally to WCM. If you would like to speak to someone regarding any security mentioned herein, please contact WCM on +1 212 389 1269. Investing in any non-U.S. securities or related financial instruments mentioned in this communication may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the SEC in the United States. Information on such non-U.S. securities or related financial instruments may be limited. Non-U.S. companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect in the United States. The value of any investment or income from any securities or related derivative instruments denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related derivative instruments.
The author of this communication is employed by Westpac and is not registered or qualified as a research analyst, representative, or associated person of WCM or any other U.S. broker-dealer under the rules of FINRA, any other U.S. self-regulatory organisation, or the laws, rules or regulations of any State. Unless otherwise specifically stated, the views expressed herein are solely those of the author and may differ from the information, views or analysis expressed by Westpac and/or its affiliates.
UK: The London branch of Westpac is authorised in the United Kingdom by the Prudential Regulation Authority (PRA) and is subject to regulation by the Financial Conduct Authority (FCA) and limited regulation by the PRA (Financial Services Register number: 124586). The London branch of Westpac is registered at Companies House as a branch established in the United Kingdom (Branch No. BR000106). Details about the extent of the regulation of Westpac’s London branch by the PRA are available from us on request.
This communication is not being made to or distributed to, and must not be passed on to, the general public in the United Kingdom. Rather, this communication is being made only to and is directed at (a) those persons falling within the definition of Investment Professionals (set out in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”)); (b) those persons falling within the definition of high net worth companies, unincorporated associations etc. (set out in Article 49(2)of the Order; (c) other persons to whom it may lawfully be communicated in accordance with the Order or (d) any persons to whom it may otherwise lawfully be made (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this communication or any of its contents. In the same way, the information contained in this communication is intended for “eligible counterparties” and “professional clients” as defined by the rules of the Financial Conduct Authority and is not intended for “retail clients”. Westpac expressly prohibits you from passing on the information in this communication to any third party.
European Economic Area (“EEA”): This material may be distributed to you by either: (i) Westpac directly, or (ii) Westpac Europe GmbH (“WEG”) under a sub-licensing arrangement. WEG has not edited or otherwise modified the content of this material. WEG is authorised in Germany by the Federal Financial Supervision Authority (‘BaFin’) and subject to its regulation. WEG’s supervisory authorities are BaFin and the German Federal Bank (‘Deutsche Bundesbank’). WEG is registered with the commercial register (‘Handelsregister’) of the local court of Frankfurt am Main under registration number HRB 118483. In accordance with APRA’s Prudential Standard 222 ‘Association with Related Entities’, Westpac does not stand behind WEG other than as provided for in certain legal agreements (a risk transfer, sub-participation and collateral agreement) between Westpac and WEG and obligations of WEG do not represent liabilities of Westpac. Any product or service made available by WEG does not represent an offer from Westpac or any of its subsidiaries (other than WEG). All disclaimers set out with respect to Westpac apply equally to WEG.
This communication is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.
This communication contains general commentary, research, and market colour. The communication does not constitute investment advice. The material may contain an ‘investment recommendation’ and/or ‘information recommending or suggesting an investment’, both as defined in Regulation (EU) No 596/2014 (including as applicable in the United Kingdom) (“MAR”). In accordance with the relevant provisions of MAR, reasonable care has been taken to ensure that the material has been objectively presented and that interests or conflicts of interest of the sender concerning the financial instruments to which that information relates have been disclosed.
Investment recommendations must be read alongside the specific disclosure which accompanies them and the general disclosure which can be found here. Such disclosure fulfils certain additional information requirements of MAR and associated delegated legislation and by accepting this communication you acknowledge that you are aware of the existence of such additional disclosure and its contents.
To the extent this communication comprises an investment recommendation it is classified as non-independent research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and therefore constitutes a marketing communication. Further, this communication is not subject to any prohibition on dealing ahead of the dissemination of investment research.