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Australia: Private new capital expenditure report for Q3 to be highlight - BNZ

A week out from the RBA meeting and ahead of September quarter GDP, the highlight for this week will be the Private New Capital Expenditure report for Q3, out Thursday, points out David DeGaris, Research Analyst at BNZ.

Key Quotes

“The report also comes with updated expectations for 2017-18, surveyed amid signs of improving business activity. In this context, we look for a further upgrade in investment expectations, which will also be supported by the usual through the year firming of plans.”

“NAB looks for an upgrade from $101.8bn to $105bn. We would not be surprised to see some modest upgrade even for the Mining industry reflecting the combination of better industry conditions and maintenance capex spending now “catching up” to sustain production and physical assets. For Q3 spending, we look for growth of 1% after similar 0.8% growth in Q2.”

“The other notable releases for the week come on Thursday too with the release of RBA Credit and Building Approvals for October. For RBA Credit, we look for a modest rebound in growth from 0.3% m/m in September to 0.4%.”

“The residential building cycle is at an interesting juncture. It had seemed that apartment approval numbers had peaked, but the trend has turned modestly positive in recent months. Whether this reflects stronger underlying demand to which developers are responding to, remains to be seen, but it opens that possibility. (We also caution that approvals are one thing whereas sales and construction is another.) Without strong conviction, NAB is looking for a 1% rise in residential building approvals for October.  While there is a lot of attention on the apartment space, it’s becoming clearer that the detached housing cycle is building a little momentum.” 

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