AU: Private New Capital Expenditure & Expected Expenditure

Wed Aug 30 20:30:00 CDT 2017

Consensus Actual Previous
Q/Q 0.2% 0.8% 0.3%
Y/Y -3.0% -9.3%

Australia's survey of private capital expenditures show spending in this category rose 0.8 percent on the quarter (volumes, seasonally adjusted) for the three months to June, exceeding the consensus forecast for an increase of 0.2 percent and strengthening from an increase of 0.3 percent in the three months to March. Private capex fell 3.0 percent year-on-year in the three months to June, an improvement from the 9.3 percent drop in the three months to March.

Stronger growth in headline capex in the three months to June was driven by a strong rebound in spending on plant and equipment, increased by 2.7 percent on the quarter after a decline of 0.1 percent previously. Year-on-year growth in this competent was unchanged at minus 0.1 percent. Spending on building and structures, however, fell 0.6 percent on the quarter in the three months to June after increasing by 0.7 percent in the three months to March. Year-on-year growth in this component improved from a decline of 15.2 percent to a fall of 5.1 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$114.3 billion, which would be around 10.5 percent below the updated estimate for spending in the 2015-16 fiscal year. This latest forecast is 1.0 percent higher than that made three months ago.

Officials also published their third estimate for private capex in the 2017-18 fiscal year, forecasting it to fall to around $101.8 billion. This is 17.6 percent above the previous forecast and also well above the consensus forecast of $95.0 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 September.

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.