Australia: Softer Q2 Capex outcome – TD Securities
Analysts at TD Securities note that Australia’s Capex for Q2 fell 0.5% q/q in line with their expectations and falling under market expectations of +0.4%.
Key Quotes
“The main driver for the softer Q2 outcome was the 3.3% drop in Building & structures. This is not a complete surprise following yesterday's weak Construction data and the sensitivity around property running into the election. That said the part that feeds into GDP- Plant and machinery was up 2.5%/q and is positive for GDP.”
“Forward looking capex intentions though were positive - capex in 2018/19 was A$122.1b, up 2.3% on 2017/18 capex. The 3rd estimate of 2019/20 capex was A$113.4b, up 10% on the 3rd estimate of 2018/19. After adjusting with realisation ratios, 2019/20 capex is expected to be 3% higher than 2018/19 capex.”
“In terms of expected increases in capex for 2019/20 over 2018/19, mining capex is expected to rise nearly 9%, manufacturing +5% but services is expected to grow only +0.3% (1st est 2.2% and 2nd est 1.9%, which is disappointing considering the RBA has pinned hopes on non-mining capex driving the recovery.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
