Australian non-mining investment outlook remains weak – ANZ

By FXStreet Research Team at ANZ, suggests that today’s report provided the first estimate for Australian firms’ 2016-17 capital expenditure intentions, which disappointed ANZ and market expectations.

Key Quotes

“The outlook for non-mining investment remains weak, while mining investment is expected to contract sharply.

• After adjusting for the typical bias in firms’ investment intentions, the survey suggests that non-mining investment is likely to decline by around 6% y/y over 2016-17 in year-average terms. However, we would note that there is a high degree of uncertainty around firms’ first estimates and as such they need to be interpreted in broad terms. In addition, this survey was conducted during a period of significant market volatility, which may have weighed on firms’ investment outlook.

• While this is a disappointing outcome, we would note that the RBA has been less concerned by weak non-mining business investment in recent times, as economic activity has been increasingly concentrated in labour-intensive sectors, which are less capital intensive. Indeed, conditions in the labour market strengthened considerably over the course of 2015 despite the ongoing weakness in non-mining business investment.

• Meanwhile, mining investment is projected to decline 27% y/y over 2016-17 in year average terms, which is broadly consistent with our …read more

Source:: FX Street