Australia: Firms plan to spend more-than-expected, July retail sales flat

Ivan Delgado Independent Analyst

Today's Australian Q2 capex (private capital expenditure) shows a reading of +-5.4% q/q vs -4.2% expected and -5.2% last. Australia Q2 plant/machinery capex increased to 2.8 % vs prev -0.5 %, while Q2 building capexd decrease to -10.6 % vs prev -7.9 %. As per Australian firms, they plan to spend A$105.2b in 2016-17 vs est. of A$97b. Meanwhile, Australia's July retail sales came at 0% m/m vs 0.3% expected and 0.1% last.

JUNE KEY POINTS - CAPEX

ACTUAL EXPENDITURE (VOLUME TERMS)

The trend volume estimate for total new capital expenditure fell 3.8% in the June quarter 2016 while the seasonally adjusted estimate fell by 5.4%.
The trend volume estimate for buildings and structures fell by 7.0% in the June quarter 2016 while the seasonally adjusted estimate fell by 10.6%.
The trend volume estimate for equipment, plant and machinery rose by 1.9% in the June quarter 2016 while the seasonally adjusted estimate rose by 2.8%.

EXPECTED EXPENDITURE (CURRENT PRICE TERMS)

This issue includes the seventh estimate (Estimate 7) for 2015-16 and the third estimate (Estimate 3) for 2016-17.
Estimate 7 for 2015-16 is $127,455m. This is 15.4% lower than Estimate 7 for 2014-15. Estimate 7 is 0.2% higher than Estimate 6 for 2015-16.
Estimate 3 for 2016-17 is $105,173m. This is 9.1% lower than Estimate 3 for 2015-16. Estimate 3 is 15.2% higher than Estimate 2 for 2016-17.

JULY KEY POINTS - RETAIL SALES

CURRENT PRICES

The trend estimate rose 0.1% in July 2016. This follows a rise of 0.1% in June 2016 and a rise of 0.1% in May 2016.
The seasonally adjusted estimate was relatively unchanged (0.0%) in July 2016. This follows a rise of 0.1% in June 2016 and a rise of 0.1% in May 2016.
In trend terms, Australian turnover rose 2.7% in July 2016 compared with July 2015.

The following industries rose in trend terms in July 2016: Cafes, restaurants and takeaway food services (0.5%), Food retailing (0.1%), Other retailing (0.4%) and Clothing, footwear and personal accessory retailing (0.6%). Household goods retailing (-0.4%) and Department stores (-0.9%) fell in trend terms in July 2016.

The following states and territories rose in trend terms in July 2016: Queensland (0.2%), New South Wales (0.1%), South Australia (0.3%) and Tasmania (0.2%). Victoria (0.0%), Western Australia (0.0%) and the Australian Capital Territory (0.0%) were relatively unchanged. The Northern Territory (-0.4%) fell in trend terms in July 2016.

Author

Ivan Delgado

Independent Analyst

Established in the Asian continent since 2009, Ivan studied a degree in Business at the University Pompeu Fabra (Barcelona), while also earning a postgraduate degree in Business Administration.

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