Annette Beacher, chief Asia-Pacific macro strategist at TD Securities, points out that Australia’s December quarter private sector capital expenditure (capex) rose by a stronger-than-expected +2.0%/q (mkt +1%), with doves being left empty-handed.
“The first ‘guess’ for 2019/20 capex was $A92.1b, a combination that did not disappoint.”
“The quarterly component that feeds into GDP””plant & equipment””rose by +0.7%/q. While we had expected a flatter print, the upside is too marginal to influence our tracking for Dec qtr at +0.4%/q and 2.6%/y. In Q4, Manufacturing -4.4%/q, mining -4.3%/q, but services jump +5.6%/q.”
“Today’s report doesn’t materially impact RBA thinking as business investment wasn’t on the priority list of downside risks to the economy. While a positive report, the market focus will revert to house price deflation and the impact on the consumer, as well as employment and wage trends.”