CAPEX falls again but it’s not all bad

Private Capital Expenditure (CAPEX) for the first quarter of 2014 has fallen by 4.2% (seasonally adjusted), -0.3% trend, from the previous quarter. The markets had been expecting a decline of around 1.5% sa. However, the declines in the previous quarter have been revised to -4.4 sa (was -5.2%) and unch trend (was -0.7%). The closely watched equipment, plant and machinery figure showed a seasonally adjusted rise of 2.8% (although the previous month was revised slightly weaker to -9% from -8.6%).
The 6th (out of 7) estimates of total CAPEX for the fiscal year 2013-14 now stands at $162.8bn; which is unchanged from the 6th estimate for 2012-13 but down 2.5% from the 5th estimate for 2013-14. As we noted last quarter it would appear that CAPEX for the 2013-14 will eventually total about $160bn, or broadly unchanged from 2012-13.
The 2nd estimate for the 2014-15 fiscal year now stands at $137.1bn; which is some 12% lower than the 2nd estimate for 2013-14 but up 9.3% from the 1st estimate. As the graph below makes clear this pattern of the first 3 or 4 estimates improving, followed by some declines in the final estimates is the “usual” pattern. 

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Mining CAPEX is certainly slowing although the total for 2013-14 looks likely to come in around $95.3bn which is largely unchanged from 2012-13. The 2nd estimate for 2014-15 mining CAPEX is $80bn which would represent a decline of about 16% from the previous year. The RBA and Treasury will be hoping that other sectors can pick up that slack. On the basis of these figures we’re not looking over a CAPEX cliff but neither are we yet seeing the scale of investment pick-up hoped for.

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