The latest Private Capital expenditure data released by the ABS is consistent with MacroPlan's view that private Capex is stabilising at relatively high historic levels. Graph 1, Total Capital Expenditure indicates that 2014/15 levels are still over 40% higher than 2009/10.
Mining sector Capex is still double 2009/10, and despite the reduction in proposed resource projects current projects continue to generally run behind schedule and increase in cost. The lengthening current project delivery pipeline is likely to mitigate sharp further reductions in Capex for the sector. Despite reported reductions in employment in the sector, total mining employment grew by around 1% in the past year. Investment in buildings and structures (Graph 3) is forecast to remain over 40% higher than 2009/10.
This reflects an increase in residential and commercial construction consistent with a lower interest rate environment. Likely investment in this sector is around 10% lower than 2013/14 reflecting the passage of the peak of the resources boom, stabilisation of a Capex at historically high levels and the emergence of investment in the services sectors. For the building and property development industries (Graph 3) this means a period of good growth and consolidation. Regionally, growth will be uneven, dictated by specific resource types e.g. coal versus LNG. This will also manifest differently in capital cities with service sector related cities of Melbourne and Sydney growing strongly and the cyclical growth cities such as Brisbane then Adelaide emerging strongly.
Source: ABS ___________________________________________________________________________
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