AU: Private New Capital Expenditure & Expected Expenditure

Wed Feb 28 18:30:00 CST 2018

Actual Previous
Q/Q -0.2% 1.0%
Y/Y 4.0% 2.3%

Australia's survey of private capital expenditures shows spending in this category fell 0.2 percent on the quarter (volumes, seasonally adjusted) for the three months to December, well short of the consensus forecast for an increase of 1.0 percent and also weaker than the increase of 1.0 percent recorded in the three months to September. Private capex advanced 4.0 percent on the year in the three months to December, up from 2.3 percent in the three months to September.

The fall in quarter-on-quarter headline capex in the three months to December was driven by spending on buildings and structures, down 2.1 percent on the quarter. In contrast, spending on equipment, plant and machinery was relatively strong, up 2.2 percent on the quarter. On a sectoral basis, continued weakness in mining investment drove the headline result, with capex in that sector down 4.7 percent on the quarter. Capex in the manufacturing and other industries advanced 2.6 percent and 1.7 percent respectively on the quarter in the three months December.

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$114.6 billion, which would be around 2.5 percent above the updated estimate for spending in the 2016-17 fiscal year. This latest forecast for 2017-18 is 4.9 percent higher than that made three months ago. Officials have also made their first estimate for capex in the 2018-19 fiscal year, forecasting it to increase by 3.5 percent compared with the first estimate made for 2017-18.

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 next week.

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.