Capital Expenditure – Investment in other terms – is a big input into Australia’s GDP outlook.
It’s always important but perhaps no more so than right now as the Australian economy is trying to make the transition from the mining investment boom to more sustainable domestic lead growth.
Today we get the latest read of Private new Capital Expenditure and here is a great preview from the Economics team at the NAB:
Today is Capex day, the signature report on business investment for the quarter and the year ahead, due at 11.30am. There are two key figures to keep an eye out for today. First is the Q2 real capex where we look for a print of -2% and the market is expecting -0.9% and a range of -4.2/+3.1%. There is a nuance of this figure in that only the “equipment, plant and machinery” component of this total feeds into next week’s GDP business investment figures so that component might influence market reaction. It should do anyway. But the total initially will garner most of the initial headlines.
The other key data point from this report is the capital spending expectations for financial year 2014/15. The previous survey had an expectation of $A137bn and we look for a very slight upward revision to around $A140-145bn. Anything less than last quarter’s expectation would be soft while a number closer to $150bn would be encouraging. It’ll be interesting to see whether the very recent more positive business confidence reading for July from the NAB Business Survey and some uptick in Capex expectations for the year ahead has also been reflected in today’s ABS Capex survey. The survey was taken in July-August.
We’ll have full coverage of the data and its impact from 11.30 this morning.
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