With the commodities bubble now a distant economic memory, for some time the government has been waiting for the non-mining parts of the economy to step up to the plate and do their fair share of driving growth. During the month the new private capital expenditure numbers were published, these cover things like spending on buildings and equipment by the private sector, and the headlines screamed “20% drop in a year”.
As with so many things that appear in the media, if you stopped there you’d be forgiven for being pretty gloomy, but when you look a little deeper things aren’t nearly so bad. The capex numbers are published each quarter, and between the June and September quarters the estimate actually went up by 4%. And within that number, the services sector showed a 6.1% increase while mining also went up, by 2.3%.
According to the survey the services sector increased its planned spending on plant, machinery and equipment by a whopping 16.7%. But it’s also important to keep in mind that the survey doesn’t include a bunch of service sectors that account for about half of all the non-mining capital spending, like health care, training and education. Why would they miss out such important parts of the economy? No idea, but it means the survey dramatically overstates the importance of the mining sector.
During the month the Reserve Bank of Australia also lowered its growth forecast for 2015 to 2.25% and once again cut the inflation forecast as well. Ordinarily you’d have thought that was softening people up for another interest rate cut but alas Governor Stevens pooped everyone’s party despite the commercial banks hiking rates of their own volition and said that’s a trick they’d like to keep up their sleeve just for now. Part of that could be because the unemployment rate fell to 5.9%, which means we’re still seeing jobs being created.
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