It’s a good day for Paul Boxham, who has claimed his prize:
Australia’s capital expenditure survey was generally more positive than expected. While the actual data for Q113 fell, the survey’s forward estimates held up well. For Q113 the numbers imply a fall in investment of -4.7% (market had +0.5%) and while this will be a drag on Q1 GDP growth, it will be largely offset by a fall in imports, so Q1 GDP should still be solid. The expectations data, which is the main focus in this survey, suggested solid investment growth will continue into 2013/14. Mining investment is still set to plateau, not plummet, and non-mining investment is also set to rise solidly next year.
I don’t buy it with iron ore and coal prices likely to remain under considerable pressure. As I warned in my capex primer, the survey has a habit of overestimating mining investment. Nonetheless, today’s data belongs to Bloxo.
I agree that rates are likely to be on hold next week after the report, though I would still cut with housing clearly struggling and showing little sign of accelerating out-of-hand, the terms of trade under pressure again and the mining pipeline very likely to disappoint today’s survey (but then I’d also be installing macroprudential to guarantee it). It’s also a great opportunity to catch markets unawares and really pressure the dollar.
But the RBA goes with the data.
130530 Australian mining investment – Still set to plateau not plummet.pdf by Pablo Roberts