Australian business investment was much stronger than expected in the December quarter, but more signs are emerging that business is scaling back its capital spending plans as the resources boom exhausts itself and the general economic slowdown gathers pace.

There was enough lingering work in the pipeline to give a better than expected reading in the latest investment figures from the Australian Bureau of Statistics for the December quarter.

In fact there could be enough juice left in the business investment tank to keep Australian economic growth positive for the December quarter.

The new private capital spending figures from the ABS this morning show another increase in spending plans, but the growth rate in the December quarter estimates is noticeably lower in the September quarter.

The ABS said total new capital expenditure in the December quarter (in volume terms) rose 6.0% in seasonally adjusted estimate terms from the September quarter, with the estimate for buildings and structures up 11.5% and 1% for plant and machinery. (All seasonally adjusted).

That’s much better than market estimates which ranged around a fall of up to 3% (2.7% for Goldman Sachs JBWere, for instance).

In the fifth estimate for the current financial year, the ABS said spending could total $98,145m, 14.3% higher than estimate five for 2007-08.

That’s still a strong figure, but less than in the previous estimates.

The ABS said estimate five is 4.4% lower than estimate four for 2008-09, indicating the impact of the slump in mining and resources.

The ABS said the first estimate for the 2009-10 financial year was for a 0.6% rise in spending to $79.866 million. It’s quite likely that spending next financial year will fall, as will the spend in the next six months. And that’s the real story from the figures.

The December quarter numbers are historical, the spending plans for the rest of the year and the 2010 financial year are prospective and they are weakening by the quarter.

So what does this mean for the December quarter GDP figures next Wednesday? More economists are going positive with a Bloomberg survey today saying GDP will rise 0.9%.

On Monday and Tuesday we get an indication with the release of ABS figures for business inventories, the balance of payments figures for the December quarter and then government spending for the quarter.

The big imponderable is government spending, especially the $8 billion injected into the economy in December. That has already ruffled the ABS’s statisticians in retailing (even though retail sales jumped 3.8% in December, they were up 0.8% for the quarter).

Wages figures out yesterday for the quarter and for the 2008 year the strongest in the history of the series (which would have gotten us a rate rise next Tuesday from the RBA). (And average weekly earnings from September to November were up a sharp 1.6%, according to ABS figures today).

Construction figures were better than forecast yesterday, with a stronger than expected rise in engineering. That too will be a small positive.

The gain in engineering construction of 3.6% for the quarter was surprising, given it followed a 12.4% surge in activity in the September quarter. Along with the 6% rise in capital sending, it looks like the last fling of the resources sector.

Economists at Goldman Sachs JBWere reckon the construction and wages news suggest a slightly better economy, but they still see a small contraction in GDP for the quarter after the 0.1% rise in the September quarter. But they are redoing their numbers after the capex figures today.

And the preliminary figure for the Roy Morgan Weekly Consumer Confidence shows that Australians are more positive about their family’s financial situation in a year’s time, but that they are less confident about having ‘good times’ over the next five years. The index was down 0.2 points at 96 last weekend.