Figures point to fall in capital expenditure

The December 2006 quarter results released by the Australian Bureau of Statistics (ABS) show that compared to the previous quarter, new capital expenditure was down by 6.0 per cent on a trend estimate basis. Compared to the same period 12 months ago, total new capital expenditure was also down by 27.5 per cent.

The ABS data shows that during the year to December 2006 the industry spent $705 million on new capital expenditure. This compares with $769 million for the same period a year earlier - representing a fall of 8.3 per cent. According to projections, the industry is expected to invest $692 million up until the end of June quarter 2008.

The decline in new capital expenditure during the quarter was not just limited to the printing industry. The Australian economy also experienced a fall of 1.8 per cent on trend estimate basis during the December 2006 quarter compared to the September quarter. Over the calendar year there was a modest rise of 0.8 per cent in the trend estimate for the economy.

Printing Industries national policy and research manager, Hagop Tchamkertenian, said the December quarter outcome for the printing industry is likely to be a reflection of restraint in expenditure in the lead up to PrintEx07 in May.

"Our internal research shows that printing industry activity picked up during the December quarter resulting in welcome improvements to capacity utilisation rates. The reported moderating investment levels may be a sign that the industry has PrintEx07 on its mind," he said. "It is quite likely that some investment decisions are being deferred until the industry has had a chance to see what is on offer at PrintEx07.”

Hagop believes that another possible explanation for the moderation may be that the strong levels of investment that occurred in the industry in recent years has left the industry with sufficient capacity.

"While the moderation may be explained away by PrintEx07, the falls observed at the Australian economy level are likely due to soft economic conditions in sectors such as manufacturing. The latest data confirms that business investment is no longer the key driver of economic activity,” he said.