AU: Private New Capital Expenditure & Expected Expenditure

Wed Nov 29 18:30:00 CST 2017

Consensus Actual Previous Revised
Q/Q 0.8% 1.0% 0.8% 1.1%
Y/Y 2.3% -3.0% -2.1%

Australia's survey of private capital expenditures shows spending in this category rose 1.0 percent on the quarter (volumes, seasonally adjusted) for the three months to September, above the consensus forecast for an increase of 0.8 percent and also up from an increase of 0.8 percent in the three months to June. Private capex advanced 2.3 percent on the year in the three months to September, rebounding strongly from the 3.0 percent decline in the three months to June.

Steady quarter-on-quarter growth in headline capex in the three months to September reflects offsetting moves in growth rates for the two major components. Spending on building and structures advanced 1.2 percent on the quarter in the three months to September, up from an increase of 0.4 percent in the three months to June, but spending on plant and machinery grew at a weaker pace on the quarter, up 0.7 percent compared with 2.1 percent previously. The acceleration in headline year-on-year growth, however, reflects similar rebounds in both components.

Today's release also includes officials' revised forecast for private capex in the 2017-18 fiscal year (in value terms). Officials now expect it to be A$108.9 billion, which would be around 1.6 percent above the updated estimate for spending in the 2016-17 fiscal year. This latest forecast for 2017-18 is 5.6 percent higher than that made three months ago. Capital spending in Australia has trended lower in recent years, mainly reflecting a pullback in investment in the mining sector, but the estimate published today suggests capex may be starting to stabilise. Officials estimate capex will rise in 2017-18 by 8.3 percent in the services sector, by 6.7 percent in the manufacturing sector, and by 0.5 percent 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 next month.

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.