The big story from the September quarter’s private investment data from the Australian Bureau of Statistics wasn’t the surprise 3.9% fall.
No, it was the size of the investment boom regathering in the economy.
The ABS said the 3.9% fall in the seasonally adjusted estimate for total new capital expenditure (in volume terms) was after a reported rise in the June quarter of a revised 2.1% (originally 3.3%).
The market had been looking for a rise of 1.1%.
Business spent a still strong $26.6 billion in the September quarter.
And total estimated spending in 2009-10 was put at just over $105 billion, which would be the second highest recorded, behind the 2008-09 figure of $113.1 billion.
That was up from the June estimate of just over $90 billion.
Taken with the better construction work done in the quarter, its clear the Reserve Bank’s belief that a rebound is underway has considerable force, despite the fall in investment in the September quarter.
The fall was driven by declines in the seasonally adjusted estimates for buildings and structures, down 4.8% and for plant and machinery, down 2.9%.
But the ABS data also looked at the change in investment decisions and that’s where the coming surge is showing up.
The $105.01 billion estimate in this set of figures is 7.7% lower than the equivalent Estimate 4 for the 2008-09 financial year, but that was an improvement on the 10.4% fall in the third estimate issued in the June quarter data.
The ABS said the contributors for this were Mining (-15.1%), Manufacturing (-10.1%) and Rental, Hiring and Real Estate Services (-8.7%).
But this estimate is 5.9% higher than Estimate 3 for 2009-10.
"By major industry group, the key contributor to this rise was the total for Other selected industries (7.7%). Manufacturing rose 6.4% and Mining rose 3.2% between these estimates," the ABS said.
The government, in this month’s mid-year budget review, revised up its forecast for business investment to a fall of 6.5% in 2009-10 from an estimated slump of 18.5% made in the May budget.
In 2010-11 investment is now expected to grow by 5.5%.
Actual capital spending on plant and equipment, which fell 2.9% in the September quarter, will feed into gross domestic product due for release on December 16.
It was the second quarterly fall in the past two years and won’t concern the Reserve Bank which would have noted the sharp rise in the ABARE estimate for current mining projects to $113 billion.
That was due to the green light for the huge $43 billion Gorgon LNG project.
Reserve Bank deputy Governor, Ric Battellino said in a speech in Melbourne yesterday that "Over the next few years, Australia is also expected to see a further expansion of the resources sector, including the development of some very large gas projects.
"Mining investment, which is already at record levels as a share of GDP, could rise substantially further in the next five years or so."
The boom is out there, gathering strength.
The year could end up with spending well over $120 billion.
So much for all the nervous nellies who said investment would plunge with the downturn and wouldn’t return.
It’s slowed certainly, but only to levels seen in 2007 and early 2008, now it’s accelerating
