Capex expectations are out and are still a problem for growth:
Estimate 5 for total capital expenditure in 2016-17 is $112,155m. This is 9.0% lower than Estimate 5 for 2015-16. The main contributor to this decrease is Mining (-27.0%). Estimate 5 is 4.6% higher than Estimate 4 for 2016-17. The main contributor to this increase is Other Selected Industries (8.0%).
Estimate 1 for total capital expenditure for 2017-18 is $80,625m. This is 3.9% lower than Estimate 1 for 2016-17. The main contributor to the decrease was Mining (-20.0%).
As expected, more big falls in the mining capex cliff next year at -20% versus -27% this year. Yes, there’s a more services investment at the same pace as this year and a shallow turn in manufacturing. But net -3.9% is way below the Budget outlook of zero and way below the RBA’s silly rhetoric about the capex cliff coming to end.
But net -3.9% is below the Budget outlook of zero and below the RBA’s rhetoric about the capex cliff coming to end.
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National accounts measures weight capex more towards services so there’ll be some offset there’s still headwind to growth for another eighteen months.
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.
