Westpac comments on the March quarter capex data from Australia earlier

(in brief, bolding is mine)

By asset:

  • 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.

By industry:

  • 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).