The ABS has released the much awaited December quarter private capex figures, which offer us the best guide for the trajectory of mining investment and the RBA’s project for filling the gap it will leave behind as the boom ends. The news is both good and bad.
December quarter capex missed consensus of 1% gain by falling 1.2% but was still up 10% year on year.
More importantly, the first estimate for expected capex for 2013/14 came in at $152.5 billion. Most pundits have seen $150 as the pivot between weak and strong:
This is a decent result. The problem, if we can all it that, is it was driven by resilience in mining, not rebalancing. Mining fell 11.6% from the comparable estimate in 2012/13 but was still better than feared:
But manufacturing cratered, down 23.% from the same estimate last year and it howls hollowing out:
Other industries, which includes things like houses, grew 5.3% on last year. It is still low but is showing an encouraging rise in terms of the rebalancing needed:
Authorities will no doubt be happy with this result. There’ll be no rate cuts for a while on these figures.
But if I’m an offshore investor, I’m sticking my cash on a hair trigger. The Australian imbalance and the risk that goes with it is going parabolic.
Australian authorities want an economy totally reliant upon houses and holes and that’s what they’re going to get.