From Morgan Stanley:
Capex data for 1Q16 came in largely in line with our estimate of a substantial decline, which looks set to continueata-20%+ rate through FY17. Weremain concerned abouta”double-unwind” of capex and housing over 2016, and highlight our recent shift to a 1% trough for the RBA cash rate.
Second take on FY17 still bleak: Today’s 1Q16 capex data included the second ABS survey of private sector capex for 2016-17, which came in at A$89bn and now flags a 25% decline over the year (versus -23% for E1). The capex cliff in resources capex well understood, and E2 was largely unchanged at -38% yoy to ~A$33bn (5-year realisation). But crucially, we still have not seen any improvement in the investment plans of the non-mining sectors included within the survey’s coverage, with E2 pointing to a slightly worse 6% decline to A$60bn in FY17 (vs -5% in E1). Meanwhile, manufacturing capex is expected to fall another 7% next year, marking the fifth straight year of decline.