MNI 5 Things: Australia Q2 Capex Dn But Intentions Meet Fcast

By Sophia Rodrigues

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

Private New Capital Expenditure and Expected Expenditure data for the second

quarter released by the Australian Bureau of Statistics on Thursday:

     --Total Capex rose fell 2.5% q/q in Q2, defying MNI median forecast for a

0.7% rise. None of the economists in MNI poll had predicted a fall, so the

outcome is disappointing.

     --ABS published estimates of actual expenditure for two new industries as

an experimental series. They include education and training, and healthcare and

social assistance. The total capex for these two industries for the year ending

June 2018 was A$9.7 billion, made up of A$3.0 billion for education and

training, and A$6.7 billion for healthcare and social assistance. These

industries have been in focus in recent years, so their capex spending is

important to gauge the total capex in the economy.

     --Estimate three for 2018-19 capex came right in line with expectation with

an outcome of A$102 billion. This is a significant upgrade from estimate two of

A$87.7 billion. Mining was the main contributor to the 13.3% upgrade in

buildings and structures, and services industries was the main contributor to

the 20.0% rise in equipment, plant and machinery.

     --Estimate seven capex for 2017-18 year was A$118.9 billion, which was 1.0%

higher than estimate six, and 4.0% higher than the same estimate for the year

before. The main contributor to the rise versus the year before was services

industries.

     --The 2.5% q/q in Q2 capex was the first fall in six quarters. The decline

was mainly due to a 7.2% q/q fall in mining capex which was the biggest drop

since a 14.9% fall in Q2 of 2016. Services capex also unexpectedly fell, down

0.9% to mark the first drop in seven quarters. Manufacturing rebounded from the

2.8% q/q fall in Q1 to rise 2.8% in the latest quarter.

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

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