Australia: Capex to confirm RBA optimism - TDS

Annette Beacher, Chief Asia-Pacific Macro Strategist at TD Securities, are looking for a modest +0.5%/q (mkt +1.0%/q) for Australia’s Sep qtr real private capital expenditure (capex) while the component that feeds into GDP—plant & equipment—is expected to rise by +1%/q.

Key Quotes

“We look for the fourth estimate for 2018-19 spending to be upgraded from $A102b to $A110b (mkt $A108.5b) via all three sectors experiencing upgrades.”

“The RBA last week (Minutes and speech) noted that compared with a year ago, the biggest upside surprise for the Bank in terms of growth outcomes was via non-mining investment.”

“Updated planned spending for 2018-19 will be closely watched by the RBA for upgrades to non-mining investment in the light of upbeat manufacturing PMIs and NAB business conditions over the past year or so.”