The economy we don’t talk about

The manufacturing CFOs’ third estimate for this financial year is $8 billion - 6. 5 per cent down from the June estimate last year. The slide is continuing.

Meanwhile, back at the manufacturing story, it’s a small mercy that capex for the past financial year actually didn’t fall away much - $9. 2 billion, down 2. 8 per cent on 2012-13.

The important thing for keeping the industry’s plight in perspective, though, is how small it is - eight or nine billion out of the $150 billion or so non-resources total, or the likely $230 billion national total. (Mining’s estimate 3 for this year is $81. 4 billion.

The good news is that the other selected industries’ CFOs are saying in their June quarter “estimate 3″ that they’ll invest $55. 7 billion this year, a hefty 12. 2 per cent more than last year’s “estimate 3″.

So mark us down for the thick end of $150 billion worth of total non-resources capex - compared with the latest mining capex estimate of $81. 4 billion.

In the past five years, the final count in this category finished about $15 billion to $20 billion higher than the first estimate. (Some unkind souls would argue that it’s in a CFO‘s nature to be pessimistic and tight-fisted at the start of the year about how much money will have to be invested.

What matters much more for this year’s economic outlook and the big bet being made on our economy’s transition is that non-resources capex is continuing to grow - and grow nicely.

On that score, the final count for the past financial year showed capex of $58. 3 billion, up 3. 5 per cent on the previous year.

As usual, the most interesting part of the Australian Bureau of Statistics quarterly capex survey is what the nation’s chief financial officers are saying about what they will invest over the year ahead, not the historical scorecard of how much they invested over the past financial year.

Read more here: SMH


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