The latest private business Capital Expenditure survey from the ABS provides information on actual spending in Q1 as well as an update of plans for the 2014/15 financial year and the second estimate of plans for 2015/16. Capex plans for 2015/16 are very weak, with a marked downgrade from the initial estimate, as reported three months ago. Mining plans are for a sharp cut in Capex spending and the service sectors are also looking to reduce investment. The extent of the weakness in Capex plans raises the question of whether growth forecasts for 2015/16 need to be lowered. New private capital expenditure fell by 4.4% (vs –2.2% exp) to $35.90bn in the March quarter. There was a small positive revision to the Q4 data. Total new Capex has now dropped 5.3% in the 12 months to the end of March. Spending on building and structures dropped 6.5% (s.a.) in the quarter to $23.1bn. Spending on equipment, plant and machinery fell 0.5% to $12.80bn. ACGBs rallied strongly on the release of the data.
Capex disappoints
03 June 2015
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