In the view of Andrew Hanlan, Analyst at Westpac, “the Australian business investment outlook has deteriorated, the capex survey indicates, led by the service sectors.”
Key Quotes:
“The survey points to a fall in service sector capex spending in 2019/20. The challenging backdrop is beginning to bite.
That is the clear message from the latest ABS capex survey, which was conducted in October and November.
One bright spot – as is widely recognised – is that mining investment is at a turning point. Mining capex is in emerging uptrend following six years of decline.
In the September quarter, capex spending edged lower, declining by -0.2%, broadly as anticipated.
Est 4 of capex plans for 2019/20 came in at $116.7bn, representing a downside surprise.
Est 4 is 2.5% above Est 4 a year ago.
This represents a material downgrade on from 3 months earlier, when Est 3 on Est 3 printed at +10.7%.”
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