Comments from ANZ on today's capex data, firstly on the outlook for next year
- Outlook for non-mining investment remains weak
- Mining investment is expected to contract sharply
- Survey suggests that non-mining investment is likely to decline by around 6% y/y over 2016-17 in year-average terms
- Overall, these data suggest that business investment is likely to remain a considerable drag on GDP growth moving forward
ANZ caution that
- there is a high degree of uncertainty around firms' first estimates and as such they need to be interpreted in broad terms
- The survey was conducted during a period of significant market volatility, which may have weighed on firms' investment outlook (I referred to this in my preview today)
On implications for the Reserve Bank of Australia:
- RBA has been less concerned by weak non-mining business investment in recent times, as economic activity has been increasingly concentrated in labour-intensive sectors, which are less capital intensive
- Conditions in the labour market strengthened considerably over the course of 2015 despite the ongoing weakness in non-mining business investment
