MNI 5 Things: Australia Capex View Up 1st Time Since 2012-13

By Sophia Rodrigues

     SYDNEY (MNI) -  - Following are the five key observations we made from

Private New Capital Expenditure and Expected Expenditure data for the fourth

quarter released by the Australian Bureau of Statistics on Thursday:

     --Total Capex fell for the first time in four quarters, defying MNI median

forecast for an increase. The fall was due to a 4.7% q/q drop in mining capex

which was mostly offset by a rise in manufacturing capex and an increase in

services capex. The data shows non-mining capex was strong in Q4.

     --Estimate five for 2017-18 capex was higher than expected and 4.9% higher

than estimate four. The rise was mainly on account of mining capex (up 10.0%)

which suggests the rise in commodity prices may be leading to some increase in

capex.

     --Estimate one for 2018-19 capex was slightly lower than expected, though

it was 3.5% higher than estimate one for 2017-18. This is the first time since

2012-13 that estimate one for capex outlook is higher than similar estimate for

the year before. The main contributor to the increase was a 8.1% rise in

services capex.

     --In terms of assets, the rise in estimate one for 2018-19 capex is due to

a 4.7% rise in equipment, plant and machinery and a 2.7% rise in building and

structures. The 2.7% rise in building and structures suggests the recent

strength in non-residential construction is likely to carry over into 2018-19.

     --Overall the capex outlook data is in line with the Reserve Bank of

Australia's outlook for solid growth in non-mining investment in the period

ahead.

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

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