Goldman’s Tim Toohey is out with his take on the capex report and it’s discouraging stuff. He uses recent realisation ratios to suggest that total investment is set to contract by over 5% in 2013-2014 or around $9 billion.
He also notes that the RBA has previously suggested that non-mining investment was on track to grow in 2013/14 but this survey now indicates that that is no longer the case with “Other Industries” expected to decline 0.6% and manufacturing by 9.6%. Therefore his has reaffirmed his rate cut call for November.
He notes as well that the weak construction data supports his tracking estimate for June quarter GDP at 0.2% or 2.1% year on year.
Solid analysis on all counts.