5625.0 - Private New Capital Expenditure and Expected Expenditure, Australia, Mar 2005

ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 26/05/2005

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Main Features
About this Release

MARCH KEY FIGURES

		Mar Qtr 05	Dec Qtr 04 to Mar Qtr 05	Mar Qtr 04 to Mar Qtr 05
		$m	% change	% change

Trend estimates(a)
	Total new capital expenditure	15,404	2.0	13.8
	Buildings & structures	4,239	3.1	13.2
	Equipment, plant & machinery	11,137	1.5	13.7
Seasonally adjusted(a)
	Total new capital expenditure	15,081	-3.8	15.6
	Buildings & structures	4,360	7.4	18.9
	Equipment, plant & machinery	10,751	-7.1	14.4

(a) In volume terms.

New Capital Expenditure, in volume terms
Graph: New Capital Expenditure in Volume Terms

MARCH KEY POINTS

ACTUAL EXPENDITURE (VOLUME TERMS)

The trend estimate for total new capital expenditure increased by 2.0% in the March Quarter 2005. It fell by 3.8% in seasonally adjusted terms after a strong rise (10.6%) in the December quarter.
The strong increase in seasonally adjusted expenditure on equipment, plant and machinery in the December quarter - mainly driven by the Transport, Retail, Construction and Property and Business Services industries - has largely abated this quarter. There has been a significant upward revision to the December quarter estimate due to new information becoming available (see, Revisions in this Issue section, for details). However, expenditure on equipment, plant and machinery in the March quarter 2005 was 14.4% higher than in March quarter 2004.
Seasonally adjusted expenditure on buildings and structures increased this quarter due mainly to expenditure by Manufacturing.

EXPECTED EXPENDITURE (CURRENT TERMS)

This issue includes the sixth estimate for 2004-05 and the second estimate for 2005-06.
Estimate 6 for 2004-05 is $58,231m. This estimate is 14.7% higher than the comparable estimate for 2003-04 and 4.7% higher than Estimate 5.
Estimate 2 for 2005-06 is $48,361m, which is 7.0% higher than the comparable estimate for 2004-05 and is 7.9% higher than Estimate 1.
See pages 6 to 9 for further commentary on expectations data.

NOTES

CHANGES IN THIS ISSUE

There are no changes in this issue.

REVISIONS IN THIS ISSUE

The December quarter 2004 seasonally adjusted estimate (in volume terms) of actual capital expenditure on equipment, plant and machinery has been revised upward by $683m. This has led to a significant increase in the December quarter estimate of growth in capital expenditure.

The majority of the revision is due to the inclusion of a number of aircraft. These had originally been excluded from the December quarter estimates as the ABS was initially given the understanding that the aircraft were used under an operating lease arrangements, with ownership by a foreign entity. Subsequent investigations determined that the aircraft were in fact owned by an Australian entity. Additionally, although the aircraft changed ownership in the December quarter, some of the aircraft did not actually enter Australia until the March quarter 2005. Because of the change of ownership principle underlying the capital expenditure estimates, the aircraft are recorded as capital expenditure in the December quarter.

An equivalent revision will be made in the issue of Balance of Payments and International Investment Position, Australia (cat. no. 5302.0) to be released on 31 May. As capital expenditure and associated imports balance out in the National Accounts, no revision to GDP will result from the addition of these aircraft.

The remainder of the revision is due to the receipt of late data from providers and to providers correcting estimates previously supplied, which normally occurs.

INQUIRIES

For further information about these and related statistics, contact the National Information and Referral Service on 1300 135 070 or Fiona Cotsell on Sydney (02) 9268 4357.

ACTUAL NEW CAPITAL EXPENDITURE IN VOLUME TERMS

TOTAL CAPITAL EXPENDITURE

The trend estimate for total new capital expenditure increased 2.0% in the March quarter 2005. After two quarters of strong growth the rate of growth has decreased slightly this quarter.

BUILDINGS AND STRUCTURES

The trend estimate for buildings and structures increased 3.1% this quarter, the thirteenth consecutive increase. Manufacturing contributed to the majority of the increase while Other selected industries also grew strongly. Mining remained relatively unchanged.

EQUIPMENT, PLANT AND MACHINERY

The trend estimate for equipment, plant and machinery increased 1.5% in the March quarter 2005. The estimate has been increasing for the past four quarters although the rate of growth has slowed this quarter. Other selected industries has driven this change in the rate of growth.

Graph: Equipment, Plant and Machinery, CVM

MINING

The trend estimate for Mining increased by 0.4% this quarter. The rate of growth for buildings and structures has fallen slightly this quarter, while equipment, plant and machinery has been relatively unchanged for the past three quarters.

MANUFACTURING

The Manufacturing trend estimate increased 4.7%, the third quarter of strong growth. Buildings and structures has had strong growth for the past three quarters while equipment, plant and machinery is also increasing.

OTHER SELECTED INDUSTRIES

The trend estimate for Other selected industries increased 1.1% in the March quarter 2005. Buildings and structures continued to grow steadily whereas equipment, plant and machinery fell after previously strong growth.

ACTUAL AND EXPECTED NEW CAPITAL EXPENDITURE

FINANCIAL YEARS AT CURRENT PRICES

The graphs below show the seven estimates of actual and expected expenditure for each financial year. The estimates appearing below relate to data contained in tables 5 and 6. Advice about the application of realisation ratios to these estimates is in paragraphs 24 to 27 of the Explanatory Notes.

The timing and construction of these estimates are as follows:

Composition of Estimate
Diagram: Financial Years at Current Prices

TOTAL CAPITAL EXPENDITURE

The sixth estimate for 2004-05 is $58,231m which is 15% higher than the comparable estimate for 2003-04 and 5% higher than estimate 5. All industries have increased since estimate 5, except for Mining which remains relatively unchanged. Construction (up 21%), Retail (up 10%) and Wholesale (up 9%) are showing the strongest growth.

The second estimate for 2005-06 is 8% higher than estimate 1 and 7% higher than the corresponding estimate for 2004-05. All industries have increased since estimate 1, except for Wholesale which has decreased (down 7%).

Financial Year Estimates, Total

Graph: Financial year estimates, Total

BUILDINGS AND STRUCTURES

Estimate 6 for 2004-05 is slightly higher than estimate 5 and is 30% higher than estimate 6 for 2003-04.

The second estimate for 2005-06 is 11% higher than both estimate 1 and estimate 2 for 2004-05. Manufacturing has contributed to most of the growth from estimate 1 (up 27%). Transport and Property and Business have recorded decreases (down 3% and 5% respectively).

Financial Year Estimates, Building

Graph: Financial year estimates, Buildings

EQUIPMENT, PLANT AND MACHINERY

Estimate 6 for 2004-05 is 7% higher than estimate 5 and 8% higher than the comparable estimate for 2003-04. All industries have increased compared to estimate 5, with Construction (up 22%) and Retail (up 13%) showing the strongest growth.

Estimate 2 for 2005-06 is 6% higher than estimate 1, and 4% higher than estimate 2 for 2004-05. Most industries contributed to the growth since estimate 1 with the exception of Wholesale and Retail which fell 9% and 3% respectively.

Financial Year Estimates, Equipment

Graph: Financial year estimates, Equipment

MINING

Estimate 6 for 2004-05 for Mining has fallen slightly compared to estimate 5, but is still 12% stronger than the comparable estimate for 2003-04. Strong growth in buildings and structures is contributing to the change since 2003-04, offsetting a small fall in equipment, plant and machinery expenditure.

Estimate 2 for Mining for 2005-06 is 9% higher than estimate 1 and 3% lower than estimate 2 for 2004-05. Both equipment, plant and machinery and buildings and structures have increased at similar rates compared to estimate 1.

Financial Year Estimates, Mining

Graph: Financial year estimates, Mining

MANUFACTURING

The sixth estimate for 2004-05 is 2% higher than estimate 5 and 14% higher than estimate 6 for 2003-04. Equipment, plant and machinery has increased slightly since estimate 5 with buildings and structures contributing to most of the increase (up 4%).

Estimate 2 for 2005-06 has increased 14% since estimate 1 and is 16% higher than the comparable estimate for 2004-05. The increase since estimate 1 was driven mainly by a strong increase in buildings and structures (up 27%).

Financial Year Estimates, Manufacturing

Graph: Financial year estimates, Manufacturing

OTHER SELECTED INDUSTRIES

Estimate 6 for 2004-05 has increased 8% since estimate 5 and is 16% higher than estimate 6 for 2003-04. Construction has increased strongly since estimate 5 (up 21%) while Retail and Wholesale have also had strong growth (up 10% and 9% respectively).

The second estimate for 2005-06 is 5% higher than estimate 1 and 8% higher than estimate 2 for 2004-05. All component industries have increased since estimate 1 with the exception of Wholesale which has decreased.

Financial Year Estimates, Other Selected Industries

Graph: Financial year estimates, Other selected industries

EXPERIMENTAL PROJECTED CAPITAL EXPENDITURE

IN CURRENT PRICE TERMS

PROJECTED CAPITAL EXPENDITURE SERIES

The projected series below apply historical realisation ratios to contemporary expectations to convert these to quarterly figures. Trend estimates of resultant quarterly time series of actual and expected expenditure are produced.

The following graphs, with accompanying commentary, show the projected capital expenditure series based on March quarter 2005 data, which includes expected expenditure up to and including the June quarter 2006. Please see paragraphs 28 to 32 of the Explanatory Notes for further details about the methodology and cautionary notes for this series.

TOTAL CAPITAL EXPENDITURE

Current price trend estimates for total Capital Expenditure have been increasing in recent quarters. Expectations suggest that this growth will reach a peak next quarter, and then start to decline over the next financial year. All major industry groups are expecting slight declines in expenditure over the 2005-06 financial year.

BUILDINGS AND STRUCTURES

In current price terms, trend estimates for buildings and structures have shown steady growth since June quarter 2002. Expectations for the next fifteen months indicate that this growth will shortly reach a peak and then start to decline over the next financial year. Mining, Manufacturing and Other selected industries are all expecting a similar peak and then similar declines in expenditure over the 2005-06 financial year.

EQUIPMENT, PLANT AND MACHINERY

Current price trend estimates for equipment, plant and machinery have been increasing over the past three quarters. However expectations indicate that this growth has reached a peak and expenditure will start to decrease over the next five quarters. Expectations indicate that this decline is across all three major industry groupings.

MINING

Trend estimates for Mining in current price terms have been flat over recent quarters. However expectations suggest that there will be strong growth in Mining over the next two quarters, which will then drop off slightly over the next financial year. Buildings and structures is the main contributor to the growth, with both asset types declining into the 2005-06 financial year.

MANUFACTURING

Manufacturing trend estimate in current price terms have shown moderate growth over the past few quarters. Expectations indicate that this growth will continue until the start of the next financial year, when it is suggested that there will be a slight decline in expenditure. The decline is expected to be across both asset types.

Graph: Projected Manufacturing Expenditure

OTHER SELECTED INDUSTRIES

Current price trend estimate for Other selected industries have shown strong growth over the past few quarters. Expectations suggest that this growth has reached a peak, and expenditure will start to decline over the next financial year. Most industry components are expecting a slight decline over 2005-06, except for Transport and Storage which is expected to increase slightly.

Graph: Projected Other Selected Industries Expenditure