Australian private new capital expenditure likely fell further in Q3 2020 - ANZ

Australian private new capital expenditure is expected to have dropped further by 1 percent on a quarter-on-quarter basis in the third quarter of 2020, noted ANZ in a research report. Private new capital expenditure had dropped 5.9 percent in the prior quarter.

“For 2020-21, we expect planned capex to be upgraded to $107bn from $99bn, on the back of the stronger-than-expected rebound in the domestic economy as well as business support measures in the federal budget”, stated ANZ.

This would be a larger than usual upgrade, and as such suggests a smaller fall of 8 percent year-on-year for 2020-21 rather than the 13 percent year-on-year implied in the second-quarter survey.

There is an upside risk, and a third-quarter estimate of AUD 112 billion or above 2020-21 would mean companies would be materially more optimistic than at any time during the pandemic so far.

“The significant rise in global COVID-19 case numbers and associated restrictions present downside risk, though, and a new estimate of AUD105bn or below would suggest that domestic firms have only a modestly improved outlook”, added ANZ.