Australian CAPEX slumps again, builds downside risk for Australia’s Q1 GDP figure

Australian Business capital expenditure for the March quarter released earlier today showed Q1 Australian capex (private capital expenditure) reading at -5.2% q/q, missing estimates at -3.5% and compared with a revised +1.8% in the previous quarter.

Spending on equipment, plant and machinery – a direct GDP input – dipped 0.5% to $11.753 billion, beating expectations for a decline of 2%. Elsewhere expenditure on building and structures slumped 7.9% to $18.86 billion, well below forecasts for a decline of 3.0%.

Outlook for business investment showed improvement. The 6th estimate for 2015/16 came in at $A126.8bn vs $124bn estimate and -17.8% y/y). Meanwhile estimate 2 for 2016/17 came in at $A89.2bn vs $82.6bn estimate 1 and -19.5% y/y last.

Weak CAPEX data builds downside risk for Australia’s Q1 GDP figure, but has few - if any - implications for monetary policy. Reaction to the data has been muted. After an initial knee-jerk downward slump, the Aussie recovered almost entire slide.