Westpac comments on the March quarter capex data from Australia earlier
(in brief, bolding is mine)
- Equipment -0.1%, a downside surprise (Westpac 1.2%)
- Building & structures 0.7%, close to the 1.2% rise reported by the Construction Work survey... a greater than anticipated disruption to home building work in Qld and NSW from storms and wet weather.
- mining 0.4%;
- services -0.5%;
- and manufacturing 6.6%
While there was a small increase in capex spending in Q1, we would describe this as a mixed result.
- Disappointments are the fall in capex by the service sectors and the broadly flat result for equipment.
- Having said that, the Q1 outcome is an improvement on recent quarters
Implications for Q2 GDP growth forecast
- We have lowered our forecast for Q2 GDP growth to 0.4%qtr, 1.7%yr, downgraded from 0.6%qtr previously
- The mining investment downturn, which is nearing its end, continues to dominate.
- The outlook for investment by the service sectors remains uncertain.
- Policy makers can take some comfort from the fact that service sector investment intentions are moving in the right direction, upgraded to +1.5% from -3% 3 months ago (base on average RR calculations).