Westpac has released a short note (below) previewing the Capital Expenditure Expectations Survey, which is due to be released on Thursday.
The key part of the note is Westpac’s scenarios around the second estimate for 2013-14, which are as follows:
Scenarios for Est 2 of 2013/14
Scenario 1, 2013/14: – a positive result
Est 2 of $157bn.
Implies $173bn, +5.5% on 2012/13
Mining, +2%; manufacturing, –3%; services, +12%.Scenario 2, 2013/14: – a soft result
Est 2 of $151bn.
Implies $166bn, +1%
Mining, flat; manufacturing, –3%; services, +3%.Scenario 3, 2013/14: – a weak result
Est 2 of $145bn.
Implies $159bn, –3%
Mining, –3%; manufacturing, –3%; services, –3%.Comment
Scenario 1 would represent a restatement of Est. 1 and would be viewed as a relatively positive update. We see the risks to this as skewed to the downside. Mining is increasingly focused on cost cutting and the initial estimate for services appears to be overly optimistic. An update more in line with scenario 2 would not surprise and would arguably pose downside risks to the RBA’s growth expectations for 2014.A 2nd estimate of around $145bn would be a weak result. Such an update would suggest clear downside risks to the growth outlook, with prospects of a broadly based decline in business investment.
Full release below.
Westpac – Risk of a Less Optimistic Capex Survey (28 May 2013)
