AUD: Weak private capital expenditure data coming for Sept quarter – Goldman Sachs

By FXStreet FXStreet (Delhi) – Research Team at Goldman Sachs, expects Australian capex trends to remain generally weak in the 3Q2015 update and expect total capex to fall by 4.0%qoq in the quarter itself, with the most important component of that decline being 2.0%qoq fall in machinery & equipment spending (as it is this sub-component which best translates to the National Accounts).

Key Quotes

“In aggregate, this is likely to leave annual capex growth at its weakest since the early 1990’s recession (~-13.5%yoy). On the forward-looking component of the 3Q2015 survey, the starting point for the FY16 outlook is a particularly weak one–so any incremental improvement needs to be seen in this context. Indeed, the ~19% decline in FY16 capex currently suggested by long-run realization ratios is a meaningfully larger retreat than our bottom of consensus expectations.”

“Given that the weakness in the mining capex outlook is well understood, we believe that it is the shift in the outlook for nonmining capex which remains most relevant to policy makers – and the larger “other selected industries” sub-component in particular. Importantly, the way that the realization ratios work, the ~9pt decline in the long-run ratio between the third and fourth estimates implies a sizeable increase in …read more

Source:: FX Street