The ABS has released December quarter Expected Private Capex and the news is poor with the mining cliff now officially in sight, manufacturing cataclysmic and only a muted response elsewhere. The fifth estimate for 2013/14 came in OK at $167 billion. But the 2014/15 estimate is 10% below most folks expectations
Brace, here we go:
Estimate 5 for total capital expenditure for 2013-14 is $167,066 million. This is 0.5% higher than Estimate 5 for 2012-13. The main contributor to this increase was Other Selected Industries (4.2%). Estimate 5 is 0.8% higher than Estimate 4 for 2013-14. The main contributor to this increase was Other Selected Industries (5.8%).
Estimate 1 for total capital expenditure for 2014-15 is $124,880 million. This 17.4% lower than Estimate 1 for 2013-14. The main contributor to the decrease was Mining (-25.2%).
MINING
Estimate 5 for Mining for 2013-14 is $102,422 million. This is 1.2% lower than Estimate 5 for 2012-13. Estimate 5 is 1.1% lower than Estimate 4 for 2013-14. Buildings and structures is 1.2% lower and equipment, plant and machinery is 1.1% lower than the corresponding fourth estimates for 2013-14.
Estimate 1 for Mining for 2014-15 is $74,201 million. This is 25.2% lower than Estimate 1 for 2013-14. Buildings and structures is 24.8% lower and equipment, plant and machinery is 28.4% lower than the corresponding first estimates for 2013-14.
MANUFACTURING
Estimate 5 for Manufacturing for 2013-14 is $8,905 million. This is 3.2% lower than Estimate 5 for 2012-13. Estimate 5 is 5.5% lower than Estimate 4 for 2013-14. Equipment, plant and machinery is 5.2% lower and buildings and structures is 6.0% lower than the corresponding fourth estimates for 2013-14.
Estimate 1 for Manufacturing for 2014-15 is $6,303 million. This is 19.6% lower than Estimate 1 for 2013-14. Buildings and structures is 35.2% lower and equipment, plant and machinery is 11.3% lower than the corresponding first estimates for 2013-14.
OTHER SELECTED INDUSTRIES
Estimate 5 for Other Selected Industries for 2013-14 is $55,739 million. This is 4.2% higher than Estimate 5 for 2012-13. Estimate 5 is 5.8% higher than Estimate 4 for 2013-14. Equipment, plant and machinery is 9.0% higher and buildings and structures is 1.8% higher than the corresponding fourth estimates for 2013-14.
Estimate 1 for Other Selected Industries for 2014-15 is $44,376 million. This is 0.4% higher than Estimate 1 for 2013-14. Buildings and structures is 2.6% higher and equipment, plant and machinery is 1.6% lower than the corresponding first estimates for 2013-14
Roughly speaking, applying the realisation ratio that averages the last three years we get a fall in business investment to around $140 billion in 2014/15 or minus almost 2% of GDP. That will not be fun.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
