AUD: Q3 real capital expenditure fell by 4%/qtr - TDS

Australia’s Q3 real capital expenditure (capex) fell by –4%/qtr, softer than the market expectations of –3% as noted by the Research Team at TDS.

Key Quotes

“The capex component that feeds into GDP- plant & equipment investment, dropped –1.9%/qtr, the first decline since Sep 2015. In terms of the Q3 Capex split by industry, actual capex dropped across all sectors. Mining investment dropped –7.2%, which was not as bad as the – 15.5%/q decline in Q2. Services capex dropped -1.9%/q, down for the first time after 3 positive quarterly prints and while Manufacturing represents only a small component of total capex, this too fell, -4.9%/q, after the outsized +15.5% jump in Q2.”

“Capex expectations for planned (raw) spend in 2016/17 came in at $A106.9b. This was also below market forecasts at A$110b and our forecasts for A$114b, with investment across Mining, manufacturing and services softer than forecasts as of the Q2 survey.”

“There are no implications of this report to next week’s RBA meeting. However this report could give the RBA a nudge that the economy may not be as strong as the Bank was thinking.”