AUD: Investment outlook remains weak – HSBC

By FXStreet Research Team at HSBC, notes that the Australian capital expenditure for Q4 2015 was a little stronger than expected at +0.8% q-o-q (market had -3.0%), but the details were weaker.

Key Quotes

“The machinery and equipment component, which feeds into GDP, was up by only 0.1% and, combined with a sharp decline in yesterday’s engineering numbers (-9.5% q-o-q), suggests business investment will be a drag on growth in Q4 GDP. In addition, the forwardlooking parts of the capex survey were weak.

The estimates for 2015/16 were largely unchanged but the first estimate for 2016/17 was below expectations. Mining investment is expected to continue declining rapidly and a further -7% drop in non-mining investment is expected in 2016/17. This survey has limited coverage of the services sectors, so may understate the outlook for growth. Nonetheless, there is no getting around the fact that the business investment outlook remains weak.

Facts

– The capex survey suggests that private capital expenditure rose by 0.8% q-o-q in Q4, better than the -3.0% decline expected by the market. Spending on buildings and structures was up 1.2% q-oq, while spending on machinery and equipment rose by 0.1%.

– It is the latter number (machinery and equipment) that feeds …read more

Source:: FX Street