MNI 5 THINGS. Australia Q3 Private New CAPEX seen higher

--Data To Be Released Thursday Nov 29

By Lachlan Colquhoun

     SYDNEY (MNI) - Australian Private New Capital Expenditure for Q3 will be

released on Thursday November 29, with analysts expecting the quarter-on-quarter

data to move into positive territory.

     Here are five factors to look for in the data to be released Thursday AM

Sydney time.

     CAPEX expected to rebound. Total new capital expenditure fell 2.5% in the

June quarter, but a consensus of analysts expects this to rebound to +1.0% for

Q3. Year-on-year data posted in Q2 was a flat 0.4% which followed a 4.2% full

year rise over 2017, so the full year 2018 result is likely to be significantly

lower.

     Data weighing on GDP. The CAPEX data follows a weaker than expected 2.8%

Q/Q fall in construction work released on Wednesday, and both results will

contribute to Q3 GDP data to be released next week. The disappointing

construction work data will put a dent in GDP, so a positive CAPEX figure is

important to buoy next week's growth data.

     Construction Sector has been a weak point. The Building and Structures

component in the Q2 CAPEX figure was a fall of 3.9% against the overall 2.5%

decline, and the weakening building sector was also underlined in this week's

construction data. Investment in the sector has been identified as a risk by the

Reserve Bank of Australia in both its financial stability and monetary policy

statements.

     RBA interest rate decision next week. The RBA Board will meet to discuss

official interest rates next Tuesday, and while it is not expected to change the

official setting from 1.5% it is closely monitoring downside risk. While the

RBA's stated outlook is for a strengthening economy to prompt an interest rise

sometime in 2019, this week's data and next week's GDP figure will send

important signals on the likelihood of that scenario playing out.

     Mining investment drags. CAPEX in the mining sector continues to put a

dampener on the overall data, and has been in negative territory for seven of

the previous eight quarters. CAPEX is being largely supported by the services

and manufacturing industries

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