The much anticipated September quarter ABS private capex report is out and the news is good and bad. 3Q was up 2.8%, ahead of expectations of 2%:
That’s the good news but not what everyone is interested in. What they are focused on is the capex intentions for the year ahead, which still record good growth:
But note how capex estimates tend to fall through the fifth to seventh estimate (remember each set of bars is three quarters in advance) and it is unusual for the fourth estimate to fall, especially so far. The trajectory will likely culminate in good growth for the year but not that high above the year before. We’ll know next quarter about the first estimate for 2013/14 which will be revealing, in my view.
The internals are perhaps more revealing. Building capex is powering:
But equipment is tailing off:
This suggests that the RBA should be concerned. There is no sign of a rebound in non-mining capex intentions, neither in manufacturing which is, to put it mildly, rooted:
Nor in everything else, which is better but still well down on last year’s fourth estimate:
So the strength remains confined to mining and its fourth estimate fell sharply:
There is nothing in this survey to suggest the economy has as yet shifted to fill the gap when mining begins to shrink, around Q1 13/14 is my guess.
I give this survey to the December rate meeting doves.
