Australia's Q4 Capex headline rallied 2.0% v/s 0.5% expected

The Australian Bureau of Statistics published fourth quarter (Q4) 2018 private capital expenditure at 00:30 GMT on Thursday.

Reports suggest, the private capital expenditure grew ahead of the 0.5% market forecast to 2.0% versus -0.5% contraction registered during the previous quarter.

Key Points:

ACTUAL EXPENDITURE (VOLUME TERMS)

• The trend volume estimate for total new capital expenditure rose by 1.3% in the December quarter 2018 while the seasonally adjusted estimate rose by 2.0%.
• The trend volume estimate for buildings and structures rose by 1.2% in the December quarter 2018 while the seasonally adjusted estimate rose by 3.2%.
• The trend volume estimate for equipment, plant and machinery rose by 1.5% in the December quarter 2018 while the seasonally adjusted estimate rose by 0.7%.

EXPECTED EXPENDITURE (CURRENT PRICE TERMS)

• This issue includes the fifth estimate (Estimate 5) for 2018 -19 and the first estimate (Estimate 1) for 2019-20.
• Estimate 5 for 2018-19 is $118,361m. This is 3.6% higher than Estimate 5 for 2017-18. Estimate 5 is 4.0% higher than Estimate 4 for 2018-19.
• Estimate 1 for 2019- 20 is $92,144m. This is 11.0% higher than Estimate 1 for 2018-19.

Ahead of the release, TD Securities said,

Q4 private capital expenditure is expected to post a modest lift of +0.2%/q via a fall of -1%/q in non-residential building and a +1.5%/q lift in plant and equipment (the latter feeding into GDP, mkt +1.0% within a broad range of flat to +3.5%). This report also includes the fifth estimate for 2018/19 (TD $A119.7b in original terms) and the first estimate for 2019/20 (TD $A94.5b, original and unreliable first 'guess' by companies). Jan private sector credit is expected to lift by +0.3%/m.

About the Aussie Capex

The Private Capital Expenditure released by the Australian Bureau of Statistics measures current and future capital expenditure intentions of the private sector. It is considered as an indicator for inflationary pressures. A high reading is seen as positive (or bullish) for the AUD, while a low reading is seen as negative (or bearish).