Bloxo claims his prize

Advertisement
images

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.

Advertisement

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

Advertisement
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.