Australian business investment fell by 2.2 per cent in the December quarter, dropping further than expected, official figures show.

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The closely-watched capital expenditure figures, released by the Australian Bureau of Statistics, cover investment in capital goods which includes such things as buildings and equipment.

Businesses collectively expect to invest $152.656 billion on capital goods by the end of the 2014/15 financial year, which is 8.6 per cent lower than the same estimate made for the previous year, the ABS said on Thursday.

The reduction in investment is a clear manifestation of the drop in business confidence.

The first estimate of capital expenditure for 2015/16 is 12.4 per cent lower than the first estimate for 2014/15.

– with AAP