Australia's Economic Rebalancing Postponed As Capex Data Surprises On The Downside

The Australian Bureau of Statistics’ Q4 2013 Capex data has come in at -5.2%, disappointing traders who were expecting the figure to come in flat or at -1.3%.

Last quarter’s reading of 3.6% was far more positive; today’s figure may have economists adjusting their GDP forecasts back down.

The AUD dropped to $US0.8915 after the ABS’ 11.30am announcement.

Source: ABS

Capex is a complex number; today’s data is both the 5th estimate of Australian firms’ Capex plans for 2013/14 and the 1st estimate for 2014/15.

From the ABS: “Estimate 5 for 2013-14 is $167,066m. This is 0.5% higher than Estimate 5 for 2012-13. Estimate 5 is 0.8% higher than Estimate 4 for 2013-14. Estimate 1 for 2014-15 is $124,880m. This is 17.4% lower than Estimate 1 for 2013-14.”

Source: Twitter

The break up looks really poor with buildings and structures down 3.5% and equipment, plant and machinery off a stunning 8.6% during Q4.

As AMP chief economist Shane Oliver noted, that doesn’t bode well for Australia’s Q4 GDP, which is due out soon. According to economist Stephen Koukoulas, it could put GDP 1 percentage point lower.

The RBA won’t be pleased because with mining down so much and the first estimate for 2014/15 so much lower, today’s numbers indicate Australia’s much-needed economic rebalancing is still a way off.

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