MNI DATA IMPACT: Australia Q1 Private Capex Turns Negative

By Lachlan Colquhoun

     SYDNEY (MNI) - Australia Private New Capital Expenditure Data fell 1.7% in

the first quarter of 2019, following a 2.0% increase in the last quarter of

2018. This was a big miss, as the market was expecting a result between 0.5% and

1.0%. In terms of the y/y data, capex is down 1.9%.

     Here are other factors of interest in the data release from the Australian

Bureau of Statistics.

How many rate cuts? 

The RBA has telegraphed it is set to cut official rates next week, to a new

record low of 1.25%. Today's data adds to the picture of a faltering economy

which is likely to be confirmed by GDP data next week. Financial markets are

expecting at least two interest rate cuts this year, with some analysts

forecasting three.

Equipment, plant and machinery. 

Capex for this category, which feeds into GDP calculations, fell 0.5%, but is up

2.4% y/y.

Watching the estimate. 

One positive was an upwardly revised estimate for 2019-20, up from A$92.1

billion to A$99.1 billion. This was higher than market estimates of around A$96

billion. These are only forecasts, however, and with the economy faltering even

these modest numbers may not be achieved.

Building and Construction doldrums. 

Private investment in building and structures slumped 2.8% for the quarter and

is down 5.5% y/y, underlining the slump which is weighing on the wider economy.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$A$$$,M$L$$$]