Aussie capes preview: watch for weakness – Westpac

By FXStreet Analysts at Westpac noted that Aussie Capex is up and offered a preview.

Key Quotes:

Due at 11:30am Syd/9:30am Sing/HK, the median for Australia’s actual Q1 capex is -3.5% (Westpac -4.0%). While building & structures should resume its slide, economists will focus on the equipment, plant & machinery component for GDP forecasts. Equipment spending, accounting for almost 40% of capex in this survey, is expected to be flat in Q1 as it was in Q4. This comes as the lift in services offsets the downturn in mining.

We expect business investment plans to remain weak. In today’s report we will see the 6th estimate of 2015/16 spending, likely to hold around -17% y/y, at AUD124bn. But with the new financial year only 5 weeks away, there is a lot more interest in the 2nd estimate of 2016/17 plans. The survey was conducted in April and early May. Caution is needed with these early estimates but it is still useful information.

Total planned investment was AUD82.6bn, -19.5% y/y in the 1st estimate, a weak result. We look for only very modest improvement, to AUD86bn, -18% y/y. While the steepest falls in mining investment should have been in 2015, a further substantial decline is a …read more

Source:: FX Street