The ABS has released its quarterly private capex survey for the September quarter and the results are much better than expected with capex plans in mining holding up, services rebounding with manufacturing up the creek:
TOTAL CAPITAL EXPENDITURE
Estimate 4 for total capital expenditure for 2013-14 is $166,832 million. This is 2% lower than Estimate 4 for 2012-13. The main contributor to this decrease was Mining (-3.3%). Estimate 4 is 3.2% higher than Estimate 3 for 2013-14. The main contributor to this increase was Other Selected Industries (7.6%).
BUILDINGS AND STRUCTURES
Estimate 4 for buildings and structures for 2013-14 is $119,326 million. This is 1.4% higher than Estimate 4 for 2012-13. The main contributors to this increase were Mining (1.5%) and Other Selected Industries (4.1%). Estimate 4 for buildings and structures is 2.2% higher than Estimate 3 for 2013-14. The main contributor to this increase was Mining (2.3%).
EQUIPMENT, PLANT AND MACHINERY
Estimate 4 for equipment, plant and machinery for 2013-14 is $47,506 million. This is 9.7% lower than Estimate 4 for 2012-13. The main contributor to this decrease was Mining (-30.2%). Estimate 4 for equipment, plant and machinery is 6% higher than Estimate 3 for 2013-14. The main contributor to this increase was Other Selected Industries (12.1%).
MINING
Estimate 4 for Mining for 2013-14 is $104,453 million. This is 3.3% lower than Estimate 4 for 2012-13. Estimate 4 is 1.0% higher than Estimate 3 for 2013-14. Buildings and structures is 2.3% higher and equipment, plant and machinery is 8.0% lower than the corresponding third estimates for 2013-14.
MANUFACTURING
Estimate 4 for Manufacturing for 2013-14 is $8,947 million. This is 11.2% lower than Estimate 4 for 2012-13. Estimate 4 is 4.1% higher than Estimate 3 for 2013-14. Buildings and structures is 2.3% lower while equipment, plant and machinery is 7.5% higher than the corresponding third estimates for 2013-14.
OTHER SELECTED INDUSTRIES
Estimate 4 for Other Selected Industries for 2013-14 is $53,432 million. This is 2.6% higher than Estimate 4 for 2012-13. Estimate 4 is 7.6% higher than Estimate 3 for 2013-14. Buildings and structures is 2.4% higher and equipment, plant and machinery is 12.1% higher than the corresponding third estimates for 2013-14.
The important calculation to make is what will the realisation ratio be on the estimate? As you can see in chart one, business consistently overestimates its estimates of spend (driven mostly by mining bullishness). If we use a ratio based upon last year’s now completed investment then the fall in the year ahead is going to be about $10 billion or 6%, which is roughly the same as it was in last quarter’s release. Average it over three years and it will be smaller.
Anyway you cut it, though, it’s still holding up better than my forecasts. I’m expecting roughly double that fall.And there has been a decent lift in services capex plans too showing some rebalancing. Manufacturing remains on the road to doom.
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The dollar bounced half a cent and I’m not surprised. This release shows a manageable step down not a cliff.
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.
