Australia’s private sector capital expenditure likely to have declined in Q1

In the last quarter of 2015, Australia’s private sector capital expenditure had unexpectedly increased. However, the same scenario is unlikely to take place in the first quarter. The surprise on the upside during Q4 was an almost unchanged mining sector figure.

“We expect a large-scale decline in Q1, keeping the annual rate of change close to -30%, and hence close to the survey of capex plans”, said Societe Generale in a research report.

But capital expenditure is likely to have moderate gains in manufacturing sector and other sectors. In the manufacturing sector, spending has declined recently to the almost lowest levels recorded in 25 years.

Meanwhile, the total capital expenditure plans for FY2015/2016 are quite expected to have fallen further in sequential terms, added Societe Generale. On an annual basis, the pace of the drop is expected to have intensified slightly as the sequential drop a year ago was quite small. On the contrary, the second estimate for capex plans for FY2016/17 is expected to give a less bearish view. Capex plans in other industries are likely to have become positive as compared with the plans a year ago, according to Societe Generale.