From around the web.:
JPMorgan economist Tom Kennedy
Weak numbers across the board. It looks like capex is going to be a bit more of a drag on GDP than we had pencilled in. We had 0.5 per cent and we are in the process of adjusting it. I would say there is some downside risk. A concern could arise if the non-mining sector didn’t lift in the next six months. The numbers, although they are looking a little bit better, they are not doing anywhere near enough to offset the drag from mining. We see the RBA on hold until mid-next year and then a rate hike.
AMP Capital Investors chief economist Shane Oliver
The shock number wasn’t so much the quarterly figure, it was the year ahead estimates for 2015/16 … it’s a pretty hefty downgrade. There’s still not a lot of evidence that non-mining investment is filling in the gap left by the collapse in mining investment. It still tells us there’s still a risk that the Reserve Bank may have to cut interest rates again. All the risks are on the downside for interest rates.
RBC Capital Markets senior economist Su-Lin Ong
Pretty weak numbers all around. Our GDP number was already shaping on the soft side around 0.5 per cent, there is a bit of downside risk with that number. More importantly, the key mining component remains pretty poor. The much hoped-for pick up in non-mining investments to fill some of the hole in mining capex is definitely not coming through in these plans. I suspect for the RBA there is no great surprise. They’ve cut rates in the last few months ahead of the official capex.
UBS economist Scott Haslem
The ‘capex cliff’ arrived early with implied nominal growth in 2014-15 slashed to -8 per cent and 2015-16 cut to -14 per cent, both much weaker than our forecast -4 per cent…But, this data is so bad it would worry the RBA, and now raises the risk they cut rates again (but probably not until after Q2 CPI),” Haslem says. “Indeed, a recessionary capex outlook is a downside risk to our already well below consensus GDP forecast of 2.2 per cent in 2015 and 2.8 per cent in 2016.”
Goldman Sachs economist Tim Toohey
Given the scale of the declines in this survey we reiterate our warnings that economic growth estimates remain skewed to the downside and the monetary easing cycle is unlikely to be complete
We continue to expect the RBA to ease interest rates again in 2015, most likely at the August meeting.
