Australia: Softer than expected Capex, disappointing retail sales - TDS

Research Team at TDS, notes that Australia’s Q2 real capital expenditure (capex) fell by –5.4%/qtr, softer than expected (mkt –4.0%).

Key Quotes

“However the forward looking details were more positive on delving deeper into the report.  The planned (raw spend) for 2016/17 was $A105.2b, higher than even our top-of-the-range forecast of $A102b, a decline of -13%/yr vs the expected 20% decline implied from the last report. After adjusting (5yr realisation ratio) expected spending is forecast to reach $A111b. Also the part feeding into GDP, plant and equipment investment rose +2.8%, the highest quarterly print in two years.  Full details can be accessed here.

Retail Sales for July were disappointing, flat on the month vs an expected rise of +0.3%. A 6.2% decline in Department store sales appears to have been the trigger. Although this measure is volatile, the overall trend over the last 6 months is weak, with annual sales running around half of the long term average.”