Australia: Weaker than expected Q1 capex - TDS

Analysts at TD Securities note that Australia’s Q1 capex was weaker than expected at -1.7%/q (mkt +0.4%) although the component that feeds into GDP (plant and equipment) was -0.5%.

Key Quotes

“In contrast to the 7.8%/q jump in non-res construction (work done), this survey reported a slump in non-res investment of -2.8% so mixed messages there. Our GDP tracking unchanged at +0.2%/q and 1.5%/y.”

“Planned investment spend for this year was upgraded a little from 2% to 3% growth to $A123b, and the second estimate for next year 2019/20 was unchanged at $A124b, although at $81b is a record planned spend for services investment.”

“In other news (1) building approvals for Apr were soft at -4.7%/m (even houses -2.6%/m) and (2) the annual FWC minimum wage decision was $A19.49/h, or a 3% wage increase, the smallest increase in three years.”