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27 Feb 2014
Flash: Australia’s capex key for the RBA - Westpac
FXStreet (Bali) - Australia’s private capex report (00.30GMT) will be of considerable interest to the RBA, notes Sean Callow, FX Strategist at Westpac.
Key Quotes
"It will be of interest for the RBA due to both the Q4 actual spending for its implications for GDP due on Wed but probably more for the survey of investment intentions. Turning first to the Q4 capex, we look for -1% q/q total, close to the median forecast but with the Bloomberg survey ranging from -3% to +1.2%."
"We expect both plant & equipment and building & structures to fall by around 1%. This would leave our Q4 GDP forecast around 0.9% q/q."
"As mining investment declines, the RBA is keen to see investment in other industries pick up. So far, the estimates for 2013/14 have been somewhat encouraging and judging by better sentiment in business surveys, this should be a decent update, reinforcing the RBA’s neutral bias."
"While labelled Q4, the survey of intentions is conducted from Jan into Feb. The main focus will be the 5th estimate of 2013/14 investment. The 4th estimate was $167bn, only -2% y/y. An updated reading around that level would be a solid outcome that should be neutral for the RBA."
"A number near $160bn would be a disappointment, especially if the services sector is only about flat y/y, given manufacturing is firmly negative in all our scenarios. A headline above $170bn would be very encouraging. We will also see the first estimate of 2014/15 investment plans. Historically the first estimates are quite unreliable."
Key Quotes
"It will be of interest for the RBA due to both the Q4 actual spending for its implications for GDP due on Wed but probably more for the survey of investment intentions. Turning first to the Q4 capex, we look for -1% q/q total, close to the median forecast but with the Bloomberg survey ranging from -3% to +1.2%."
"We expect both plant & equipment and building & structures to fall by around 1%. This would leave our Q4 GDP forecast around 0.9% q/q."
"As mining investment declines, the RBA is keen to see investment in other industries pick up. So far, the estimates for 2013/14 have been somewhat encouraging and judging by better sentiment in business surveys, this should be a decent update, reinforcing the RBA’s neutral bias."
"While labelled Q4, the survey of intentions is conducted from Jan into Feb. The main focus will be the 5th estimate of 2013/14 investment. The 4th estimate was $167bn, only -2% y/y. An updated reading around that level would be a solid outcome that should be neutral for the RBA."
"A number near $160bn would be a disappointment, especially if the services sector is only about flat y/y, given manufacturing is firmly negative in all our scenarios. A headline above $170bn would be very encouraging. We will also see the first estimate of 2014/15 investment plans. Historically the first estimates are quite unreliable."