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Thursday, 31 May 2018

CapEx disappoints

Actual investment muddles along

Actual new capital expenditure increased moderately to $29.9 billion in the first quarter of 2018.

Total capex was 4.1 per cent higher than a year earlier in March 2018 in trend terms. 

The result was driven by ongoing investment in Melbourne and Sydney, with these two cities still chugging along.

While it doesn't contribute to growth nationally in such a material way, capex was also positive in Tasmania and the ACT.

However, there was not so much joy elsewhere.

The sixth estimate for 2017-18 capex was $117.5 billion, up by 3.8 per cent from a year earlier.

Investment plans remain soft

However, the second estimate for 2018-19 capex was on the soft side at $87.7 billion, only 1.4 per cent higher than a year earlier. 

There's clearly been a swing towards services investment and away from mining, and we're probably through the worst in terms of actual capital investment. 

However, the trend looks rather lacklustre, and interest rates are headed nowhere fast.