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28 May 2015
RBA to pay more attention to 2015/16 capex - Westpac
FXStreet (Bali) - Australia Q1 actual private capital expenditure and investment intentions will be released at 1.30 GMT, notes Sean Callow, FX Strategist at Westpac, who breaks down his view on each of the key components, while adding that the RBA will probably pay more attention to 2015/16 capex expectations.
Key Quotes
"Australia Q1 actual private capital expenditure and investment intentions will be released at 11:30am Syd/9:30am Sing/HK. Westpac’s forecast for Q1 is about in line with market consensus, at -2.4% q/q v –median 2.2%. We are expecting building & structures to keep falling, down just over 3%, infrastructure led lower by the mining sector and building work also declining. Equipment spending is also looking like it will continue to decline, down 0.8%, with business confidence evaporating of late (this is the more important component, as it fits more neatly into GDP). The could lead economists to adjust their GDP forecasts (out next week)."
"The RBA will probably pay more attention to 2015/16 capex expectations. This will be the second estimate. History suggests Est 2 will be higher than Est 1, so an outcome of A$121bn would be neutral even though Est 1 was $109.8bn. The median forecast on Bloomberg is $115bn, which we would view as a soft outcome. The previous survey pointed to a decline in non-mining capex, as well as a sharp drop in mining investment. An outcome of $126bn would be a “good” result, but is unlikely. We will also see Est 6 for 2014/15 capex plans."
Key Quotes
"Australia Q1 actual private capital expenditure and investment intentions will be released at 11:30am Syd/9:30am Sing/HK. Westpac’s forecast for Q1 is about in line with market consensus, at -2.4% q/q v –median 2.2%. We are expecting building & structures to keep falling, down just over 3%, infrastructure led lower by the mining sector and building work also declining. Equipment spending is also looking like it will continue to decline, down 0.8%, with business confidence evaporating of late (this is the more important component, as it fits more neatly into GDP). The could lead economists to adjust their GDP forecasts (out next week)."
"The RBA will probably pay more attention to 2015/16 capex expectations. This will be the second estimate. History suggests Est 2 will be higher than Est 1, so an outcome of A$121bn would be neutral even though Est 1 was $109.8bn. The median forecast on Bloomberg is $115bn, which we would view as a soft outcome. The previous survey pointed to a decline in non-mining capex, as well as a sharp drop in mining investment. An outcome of $126bn would be a “good” result, but is unlikely. We will also see Est 6 for 2014/15 capex plans."