Australia’s private sector capex likely to have fallen in Q3

Australia’s private sector capital expenditure is expected to have dropped in the third quarter, given that the private sector construction fell 6 percent sequentially in the third quarter. But as a feed-in to the third quarter national accounts, it is not the overall print that matters but just the expenditure on equipment, plant and machinery, with investment expenditure in buildings and structures coming from the construction work report, said Societe Generale in a research note.

Expenditure on equipment, plant and machinery has been rebounding for the last three quarters, and given the recent survey on capital expenditure plans, this is expected to have continued in the third quarter. But, smaller rise is expected than the 2.8 percent growth seen in second quarter.

The survey of capital expenditure in FY2016/2017 is expected to indicate towards an additional contraction as compared to the previous year and also an extension of the moderating trend that has been quite evident in the earlier two quarterly surveys, according to Societe Generale.

Plans in the mining sector are expected to still indicate towards additional cutbacks; however, other selected industries are likely to see a rise in capex plans, added Societe Generale.

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