A preview of the data due from Australia today, Q1 Private Capital Expenditure, more commonly referred to as the far more snappy 'Capex'
- For the headline data, expected is is -2.2% and prior was also -2.2%
The background to the capex releases is it has been very weak over the past couple of years as the mining investment boom has run its course.
- Both 2013 and 2013 showed overall falls of around 4% each year
- Australian policy makers have been hoping for the shortfall to be made up in other forms of investment, into other industry sectors. The RBA has been lowering interest rates to encourage this ... but the results, investment into non-mining related sectors, have not been as strong as desired.
- Weak investment has impacted across the economy, on jobs and consumer confidence
- What this means is that if stronger gains are seen for capex it should be supportive of the currency, and if not ... well, vice versa
In addition to the headline result, of much interest (if not most interest) is the estimates for future expenditure
The December quarter survey included the 1st estimate of capex spending for 2015/16 ... which came in at $109.8bn
- The weaknesses: mining -18.8%, manufacturing -11.9%, & services -1.8%
Today's data (the March survey) will report the 2nd estimate ... if it shows improvement over the first estimate (though note, the market knows full well that the 1st and 2nd estimates are often very rough guides indeed) then that should be a currency positive, and if not .... well not. I don't expect we'll see much improvement in plans, if any at all, but it may come later in response to the 2 interest rate cuts we have so far this year
Added - The consensus expected I have seen for the 2nd estimate is $115bn