Australia 2017-18 Capex Outlook Beats Forecast on Services

--Q2 Capex Also Higher Than Expected

     SYDNEY (MNI) -  - From Private New Capital Expenditure and Expected

Expenditure data for the second quarter released by the Australian Bureau of

Statistics on Thursday:

                                       Q2  2017-18 Estimate 3

-------------------------------------------------------------

                             % Change Q/Q          In A$, Bln

Total                                +0.8               101.7

MNI Median                           +0.2                95.0

Range                      (-2.0 to +2.5)     (88.5 to 100.0)

Mining                               -2.8               +32.1

Manufacturing                        +1.4                +8.3

Other Industries                     +2.8               +61.4

Buildings and Structures             -0.6               +61.3

Equipment,Plant,Machinery            +2.7               +40.4

     FACTORS: Total capital expenditure rose for the second straight quarter due

to an increase in services and manufacturing capex that offset another quarter

of fall in mining capex. Services capex rose for the third consecutive quarter,

and posted the largest increase in five quarters while manufacturing capex

growth slowed after two strong quarterly increases. 

     Estimate three for 2017-18 capex was higher than expected due mainly to a

19.4% jump in services capex. Estimate three for manufacturing capex was also

24.2% higher than estimate two, and for mining capex it was 12.8% higher. 

     TAKEAWAY: The estimate three for 2017-18 was 17.6% higher than estimate 2

and outside the range predicted by economists in MNI poll. Economists at TD

Securities were the only ones with a forecast A$100 billion that was closest to

the outcome.

     The 17.6% upgrade surpasses the 15.7% revision between estimate two and

estimate three seen in 2016-17, according to a note published by Westpac on the

capex preview. This would make it the largest upgrade since 2010-11 and prior to

that 2005-06. 

     The main contributor to the increase was services capex which suggest the

non-mining recovery is gaining further traction and bodes well for the economy's

growth prospects.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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