AU: Private New Capital Expenditure & Expected Expenditure

May 31, 2017 08:30 CDT

Consensus Actual Previous
Q/Q 0.8% 0.3% -2.1%
Y/Y -9.3% -15.5%

Australia's survey of private capital expenditures show spending in this category rose 0.3 percent on the quarter (volumes, seasonally adjusted) for the three months to March, weaker than the consensus forecast for an increase of 0.8 percent but up from a decline of 2.1 percent in the three months to December. Private capex fell 9.3 percent year-on-year in the three months to March, an improvement from the 15.5 percent drop in the three months to December.

Stronger growth in headline capex in the three months to March was driven by spending on buildings and structures, which increased by 0.7 percent on the quarter after a decline of 4.1 percent previously. Year-on-year growth in this competent also improved from minus 25.5 percent to minus 15.2 percent. Spending on equipment, plant and machinery, however, fell 0.1 percent on the quarter in the three months to March after increasing by 0.4 percent in the three months to December. Year-on-year growth in this component also weakened from 1.5 percent to minus 0.1 percent.

Today's release also includes officials' 'revised forecast for private capex in the 2016-17 fiscal year. Officials now expect it to be A$112.6 billion, which would be around 11.4 percent below the estimate for spending in the 2015-16 fiscal year. This latest estimate is more positive than the previous forecast, but falls short of the consensus forecast of A$114 billion.

Officials also published their second estimate for private capex in the 2017-18 fiscal year, forecasting it to fall to around $85.4 billion, again above the previous forecast but weaker than the consensus forecast of $87.1 billion. Capital spending in Australia has trended lower in recent years, mainly reflecting a pullback in investment in the mining sector.

The capex survey covers around 60 percent of total business investment in Australia. More comprehensive information about the recent strength of investment will be published in the GDP report for this quarter, scheduled for release early June.

Private New Capital Expenditure & Expected Expenditure data are estimates of actual and expected new capital expenditure by private businesses for selected industries in Australia. New capital expenditure refers to the acquisition of new tangible assets either on own account or under a finance lease and includes major improvements, alterations and additions. In general, this is expenditures charged to fixed tangible assets accounts excluding expenditure on second hand assets unless these are imported for the first time.

Capital expenditures are a key to sustained growth and this survey provides information about capital spending and the types of assets that are drawing the most attention from industry. The survey, which is conducted quarterly by mail, is based on a random sample of approximately 8,000 units. The sample is stratified by industry, state/territory and derived employment size. The figures obtained from the selected units are supplemented by data from units which have large capital expenditure and are outside the sample framework or not adequately covered by it. Among the assets covered are buildings and structures including both business and residential, equipment for these structures as well as infrastructure spending. Equipment includes fixed equipment such as machinery, autos, office equipment, etc.