Actual capital expenditures fall sharply

ScreenHunter_03 Jul. 23 09.31

By Leith van Onselen

The Australian Bureau of Statistics (ABS) today released data on capital expenditures (capex) for the December quarter of 2013, which registered a seasonally-adjusted 5.2% fall in capex over the quarter and a 5.7% decrease over the year. The result disappointed analyst’s expectations of a 1.3% fall over the quarter (see below table).

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While Houses and Holes has covered the more important capex intentions survey, which covers industry’s forward-looking capex plans over the coming years, below are some backward looking charts showing actual capex up to the December quarter of 2013.

The first chart below shows actual capex by industry in dollar terms (rather than volume terms as shown above). As you can see, the fall in total capex (-4.7%) was broad-based, with mining capex (-4.8%), manufacturing capex (-6.1%), and other capex (-4.3%) all falling (see next chart).

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Manufacturing capex remains in the doldrums, falling to 11 year lows in nominal terms, with its share of total capex falling to just 5.7% – the second lowest share on record (see below charts).

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The fall in overall capex was broad-based across Australia, with all jurisdictions registering falls, except for Queensland, where capex was flat. In dollar terms, Capex fell most strongly in Western Australia (-$494 million), followed by Victoria (-463 million) and New South Wales (-$284 million):

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Looking ahead, the capex pipeline continues to trend lower, due to falling planned mining investment (see next chart).

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Overall, this release should drag on GDP for the December quarter. Moreover, the longer-term outlook remains poor, with mining capex still facing a prolonged period of falls, although the exact timing and magnitude is obviously uncertain.

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