The Australian Bureau of statistics has just released its highly anticipated Private New Capital Expenditure report (Capex) for the September quarter.
Its important because the data is expected to provide clarity on the the mining investment cliff.
Earlier this week the market was expecting a fall of 1.2% over the quarter, according to Westpac.
But the outcome was a rise of 3.6% which, while lower than last quarter’s 4% rise, is a great number for GDP growth compared to the lower expectations of the economists.
Investment in building and structures rose 6.2% in the quarter, even though equipment, plant and machinery was down 1.5% in seasonally-adjusted terms. This drove the miss.
The ABS reported that “the seasonally adjusted estimate for buildings and structures rose 6.3% in the September quarter 2013. Mining rose 5.6%, Manufacturing rose 1.5% and Other Selected Industries rose 10.0% in seasonally adjusted terms.” So to the extent that a lot of this “buildings and structures” was mining it suggests that this sector continues to power the Australian economy.
None of this changes the fact that the Australian economy is going to go through a necessary period of transition, as the billions of dollars in mining construction projects begin to come on line over the next few years.
But this number shows we have more time to make this adjustment, even if it also suggests the RBA won’t be cutting any time soon.
It’s likely that many economists around town will be upgrading their forecasts for Australian GDP on the back of this – we’ll keep you posted once they release their thoughts later today.
Greg McKenna is an active currency trader and is currently long the Aussie dollar.