The ABS has released the March quarter expected private capex report and the word of the day will be “rebalancing”.
Estimate 6 for total capital expenditure for 2013-14 is $162,849 million. This is unchanged (+$60m) from Estimate 6 for 2012-13. Estimate 6 for buildings and structures increased by 3.4% (+$3,644m) while Estimate 6 for equipment, plant and machinery decreased by 6.5% (-$3,582m). Estimate 6 is 2.5% lower (-$4,136m) than Estimate 5 for 2013-14. The main contributor to this decrease was Mining (-$7,154m).
Estimate 2 for total capital expenditure for 2014-15 is $137,063 million. This is 12.0% lower than Estimate 2 for 2013-14. The main contributor to this decrease was Mining (-$21,526m). Estimate 2 is 9.3% higher (+$11,685m) than Estimate 1 for 2013-14. The main contributors to this increase were Other Selected Industries (+$5,914m) and Mining (+$5,757m).
It’s the 2014/15 estimate that will surprise the market. It’s materially better than feared at $137 billion versus $127 billion consensus. That’s borderline tearaway.
The mining capex cliff looks big:
Estimate 2 for Mining capital expenditure for 2014-15 is $79,956 million. This is 21.2% lower (-$21,526m) than Estimate 2 for 2013-14. Estimate 2 is 7.8% higher (+$5,757m) than Estimate 1 for 2014-15. Buildings and structures is 7.1% higher (+$4,661m) and equipment, plant and machinery is 13.1% higher (+$1,096m) than Estimate 1 for 2014-15.
Manufacturing is a disaster:
Estimate 2 for Manufacturing capital expenditure for 2014-15 is $6,829 million. This is 17.8% lower (-$1,475m) than Estimate 2 for 2013-14. Estimate 2 is unchanged (+0.2%, +$15m) from Estimate 1 for 2014-15. Buildings and structures is unchanged (-$1.5%, -$32m) and equipment, plant and machinery is unchanged (+1.0%, +$46m) from Estimate 1 for 2014-15.
But services is much better: