Actual CAPEX undershoots, but plans look slightly stronger

Today’s release of private sector actual, and expected, CAPEX shows a somewhat mixed picture. Actual CAPEX for the third quarter was below market expectations at $31.4 bn which is 9.2% below the second quarter number and a full 20.0% below where it was at the same time a year ago. It is the continuing decline in mining CAPEX which is dragging the figures lower; mining investment fell 10.4% in the quarter.

Given the scale of the mining sector in QLD it should come as no surprise that the Sunshine State continues to be heavily impacted by this slowdown. CAPEX in the third quarter fell 15.2% q/q and was down 39.8% for the year in QLD. Mining CAPEX in the country as a whole has fallen 28.8% over the course of the year (in current price terms) while in QLD that decline has been a massive 56.3%.

On the more positive side of the data we see that the fourth estimate for expected CAPEX in 2015-16 was up 4% from the third estimate ($120.4 bn), although this remains 20.9% below the fourth estimate figure from 2014-15.

While we may be seeing a beginning of the end of the CAPEX crash, the fact remains that CAPEX is likely to remain well below previous years’ levels for some time and as a result continue to act as a drag on GDP growth (we shall see Q3 GDP released on Weds Dec 2nd).


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