Capital spending is down following a big year

The September 2006 quarter data shows that compared to the previous quarter, new capital expenditure was down by 6.3 per cent in trend terms. Compared to the same period a year earlier total new capital expenditure is down by 19.5 per cent.

During the year to September the industry spent $760 million on new capital expenditure. This compares with $698 million for the same 12-month period a year earlier.

According to the industry projections about $500 million in new investments are likely to take place now between the start of the December 2006 quarter and the end of the financial year.

The decline in new capital expenditure reported during the September 2006 quarter was not just confined to the printing industry. At the Australian economy level, total new capital expenditure fell by 1.1 per cent during the September quarter compared to the previous quarter. But unlike the printing industry, compared to the same quarter a year earlier, total new capital expenditure was up by 10.4 per cent.

Printing Industries,/i> National Policy and Research Manager, Hagop Tchamkertenian, said the September outcome did not come as a surprise.

"Our internal research predicted that there was going to be another fall in new capital expenditure in the printing industry following falls in the March and June quarter and the September quarter result validates this prediction," he said.

"With idle capacity an ongoing issue due to difficult trading conditions besetting the printing industry, a moderation in the industry's capital expenditure plans was always likely. What is concerning is the significant moderation in new capital expenditure outcomes at the Australian economy level. In recent times business investment has been a key driver of economic activity.

"If business investment continues to moderate then it will cause the Australian economy to slow down unless there is an offsetting pick up in household consumption expenditure.”