Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), & CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he's one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written, yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - author of Things That Make You Go Hmmm, one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, 'MacroBusiness'.

Thursday, 23 February 2017

Declining mining CapEx still hurting WA

CapEx still weak

Total private new capital expenditure declined by another 2.1 per cent in seasonally adjusted terms in the December quarter to $27.6 billion. 

Capex has declined by 15.5 per cent over the year following slight revisions to the prior quarter. 

Mining investment continues to plunge, now down to $9.4 billion from a quarterly peak of $24.3 billion in the second quarter of 2012, with yet further drops expected. 

There have been some moderate improvements in manufacturing and services capital expenditure respectively, although to date these have been relative chicken feed compared to the smashing falls in the mining sector. 

The decline in mining capex continues to hurt Western Australia, where total quarterly capital expenditure has fallen from $15.8 billion in the December quarter in the heady days of four years ago to just $7.2 billion, with further declines in the post. 

Despite the gloom in Western Australia, nationally the decline is now in all likelihood far closer to the end than to the beginning.

In fact, in other states capital expenditure is generally tracking reasonably well, if not swimmingly. 

The first estimate for total capital expenditure - which historically has always come in low - was an uninspiring $80.6 billion for 2017-18, which was a disappointing 3.9 per cent below the corresponding prior year estimate. 

This was a clear-cut miss against market expectations.

Notably the first estimate for "other industries" - essentially services  industries- was 8.3 per cent higher than in the prior year at $46.8 billion. 

However, the first estimate for mining capex remained a painful 20 per cent lower year-on-year, which really is another huge decline given what has already gone before! 

The wrap

There is some grounds for optimism here given that services investment is now steadily increasing. 

Despite this, mining capital expenditure still has some way to decline, particularly in Western Australian and the Northern Territory. 

How you experience 2017 and 2018 will largely depend on whether or not you live in Western Australia or in a resources region. 

The services industries, at least in the most populous capital cities, look set for a mainly positive year ahead. 

Gold-Construction, Australia