No joy from the June quarter private investment data released yesterday by the Australian Bureau of Statistics.
The release showed a fall of 0.5%, against a market forecast of a rise of 0.4%.
The overall drop was however slightly better than the revised 1.3% fall (previously -1.7 percent) in the March quarter.
The fall follows the sharp 5.8% slump in the value of construction work done in the quarter.
The data adds to the gloom about the chances of a solid national accounts and GDP report for the three months to June.
Private Capital Expenditure for the second quarter fell 0.5 percent, disappointing market expectations of a 0.4 percent increase.
The loss was driven largely by a fall in building and structures investment (down 3.3% – which has a direct impact on the national accounts and GDP) while equipment, plant, and machinery investment rose 2.5%.
The third estimate for the current 2019-20 financial year came in at $113,404 million, 10.7% higher than Estimate 3 for 2018-19.
NAB economist Kaixin Owyong said in a note on Thursday that the sharp fall in non-residential construction in Wednesday’s data had clearly carried though to the Capex data.
“This compares with the Reserve Bank’s forecast of unchanged investment in the quarter,” Ms. Owyong said.
As a result, she reckons that the weaker than expected business investment would subtract 0.1 of a percentage point from second-quarter GDP.
Data on business profits, inventories and wages, and salaries are out on Monday, current account and government financial transactions on Tuesday and GDP on Wednesday.
The key report will be the current account which is expected to again offset negatives from the domestic economy and again support growth.
NAB’s quarter-on-quarter forecast is 0.5%, but that could change with next week’s data.
