AU: Private New Capital Expenditure & Expected Expenditure

Wed May 30 20:30:00 CDT 2018

Consensus Actual Previous Revised
Q/Q 0.5% 0.4% -0.2% 0.2%
Y/Y 3.7% 4.0% 4.4%

Australia's survey of private capital expenditures shows spending in this category grew 0.4 percent on the quarter (volumes, seasonally adjusted) for the three months to March, just below the consensus forecast for an increase of 0.5 percent but up from a revised increase of 0.2 percent recorded in the three months to December. Private capex advanced 3.7 percent on the year in the three months to December, moderating from revised growth of 4.4 percent in the three months to December.

The increase in headline capex in the three months to March was driven by spending on equipment, plant and machinery, up 2.5 percent on the quarter after an increase of 1.8 percent in the three months to December., down 2.1 percent on the quarter. In contrast, spending on buildings and structures fell for a second consecutive quarter, down 1.3 percent after dropping 1.3 percent previously. On a sectoral basis, capex rose 1.2 percent on the quarter in the mining sector, fell 3.4 percent in the manufacturing sector, and rose 0.5 percent in other selected industries.

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$117.5 billion, which would be around 3.8 percent above the updated estimate for spending in the 2016-17 fiscal year. This latest forecast for 2017-18 is 2.8 percent higher than that made three months ago. Officials have also made their second estimate for capex in the 2018-19 fiscal year, forecasting it to increase by 1.4 percent compared with the second estimate made for 2017-18. This is 5.7 percent higher than their first estimate for 2018-19.

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.