The capital spending intentions of Australian companies have not improved enough to unsettle the new mood of corporate Australia, where boards are still preferring rewarding their investors with dividends over investing.
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Official data on Thursday showed that second-quarter capital expenditure rose 1.1 per cent from the March quarter and estimates for spend in 2014-15 were better than in the last survey.
It was enough to send the Australian dollar higher by 0.2¢ to US93.55¢.
Upon closer reading, however, there was less cause for optimism.
Westpac reduced its forecast for second-quarter economic growth to 0.4 per cent from 0.6 per cent on the back of the surprising weakness in equipment spending – down 0.9 per cent in the three months to the end of June.
ANZ's second-quarter growth forecasts also look vulnerable, with the bank signalling it was disappointed by the poor machinery and equipment investment number.
Citigroup kept its forecast for a 0.4 per cent expansion. The GDP result will be released next week.
CIMB economist Shane Lee identified that estimates for non-mining capex in 2014-15 were reduced from $74.6 billion to $72.4 billion.
That is consistent with the cash splash the ASX 200 is lavishing on investors this profit season, with strong dividends supporting a rally in stocks to the highest level in six years.
The S&P/ASX 200 Index was down 0.4 per cent to 5627.5 points midway through Thursday's session, dragged down by mining companies exposed to the falling iron ore price.
Mr Lee said that the emphasis on dividends was likely to be a feature of the market for some time yet. "We think that the capex numbers still remain pretty weak in terms of the outlook and it's not surprising really, just given the weight that shareholders are putting on dividends and the willingness of companies to return cash to shareholders at the moment," he said.
"We do think at some point that will start to give and companies will hold on to their cash a little bit more and you'll start to see a pick-up in non-mining investment."
As long as interest rates remain low, investors will have a case for demanding yield from their equity portfolios and companies have reliably complied.
And the dominant view among economists is that the Reserve Bank of Australia will be on hold for the rest of this year while the US Federal Reserve will lift rates in 2015.
