The resources boom remains intact, despite a surprise fall in actual new private capital spending in the March quarter.
Whereas the market had been expecting a 3% rise in actual new capital spending in the March quarter, the ABS said it fell 2.5%, seasonally adjusted to $20.559 billion, from an upwardly revised $21.077 billion in the December quarter.
The slowdown points to a lower growth in gross domestic product in the March quarter, which will be released next Wednesday.
The fall actual capital spending offsets the rise reported yesterday by the ABS in construction work done in the quarter of a seasonally adjusted 2.3%.
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But the ABS said the sixth estimate for spending this financial year shows an 11.1% rise to a record $87 billion, compared to the same estimate for 2006-07. The sixth estimate is also up 1.3% on the fifth estimate in February.
The ABS said estimated spending on equipment, plant and machinery spending fell 2.6% while spending on buildings and structures in the same quarter eased 0.8% in seasonally adjusted terms.
The ABS gathers the estimates in a series of seven quarterly surveys, the first in January and February before the start of the financial year in July, and the seventh immediately after the financial year ends.
But while there was a slowing in actual spending (as there was in the September quarter) the forward estimates of spending in 2008-09 continue to grow.
According to the ABS figures this morning show the second estimate for the 2008-09 financial year has risen on the first estimate given in February with an estimated $84.83 billion to be spent, up 6.9% on February, and 19.5% above the same estimate in 2007-08 in May of last year..
That puts spending on track to crack the $100 billion mark for the first time by the end of June 2009. In fact the ABS said that “While there has been some tapering of the trend series the projections for total capital expenditure indicate renewed strength in the series to drive total Capex towards the $30,000m a quarter level by the end of the 2008-09 financial year.”
The figures surprised economists as they noted there had been a solid 8% increase in the value of capital goods imports in the March quarter which suggested spending was growing.
A number of projects finished construction in the quarter and some commentators say there could have been deferments and cancellations because of the tight credit conditions. The most obvious deferment was the Moranbah ammonium nitrate plant in Central Queensland from Dyno Nobel.
But there have been reports of some projects being delayed or pushed out and not started.