Australian Q3 Capex: Business investment outlook deteriorated – Westpac

In the view of Andrew Hanlan, Analyst at Westpac, “the Australian business investment outlook has deteriorated, the capex survey indicates, led by the service sectors.”

Key Quotes:

“The survey points to a fall in service sector capex spending in 2019/20. The challenging backdrop is beginning to bite.

That is the clear message from the latest ABS capex survey, which was conducted in October and November.

One bright spot - as is widely recognised - is that mining investment is at a turning point. Mining capex is in emerging uptrend following six years of decline.

In the September quarter, capex spending edged lower, declining by -0.2%, broadly as anticipated.

Est 4 of capex plans for 2019/20 came in at $116.7bn, representing a downside surprise.

Est 4 is 2.5% above Est 4 a year ago.

This represents a material downgrade on from 3 months earlier, when Est 3 on Est 3 printed at +10.7%.”