Select a page

Banking News

Capex Suffering Execution & Demand Misalignment – ANZ

Capex Suffering Execution & Demand Misalignment – ANZ

(30 May 2022 – Australia) Disappointing Australian capital expenditure (capex) intentions reported by the Australian Bureau of Statistics (ABS) are linked to execution and demand misalignment according to ANZ.

Australian capex contracted 0.3 percent quarter-on-quarter in Q1 2022, falling well short of predictions for a 1.5 percent gain. The ABS capex result raised concerns towards the upcoming Q1 GDP result next week as recession fears stalk the Australian economy transitioning away from generationally low interest rates to curb rapidly rising inflation. The disappointing capex print resulted in the Australian dollar depreciating sharply against the USD in response.

Capex plans for 2022/23, which includes major public and private projects, jumped 11.8 percent from the first estimate and are fully 15.4 percent higher than the second estimate for 2021/22. Non-mining capex plans for 2022/23 rose 13.3 percent from the initial estimate, while mining plans were upgraded by 8.8 percent. Machinery and equipment investment was resilient in Q1,

“The weak Q1 result is not due to lack of demand, but difficulties in execution. Firms want to invest, but are pushing out their timelines. Actual capex fell in Q1 but capex plans for 2022/23 rose from the initial estimate for the year and are higher year-on-year. Capex and construction will both hit GDP in Q1. Construction activity and plans were downgraded as rain and supply constraints delayed work done” commented ANZ Senior Economist, Adelaide Timbrell.

“There is broad strength in capex plans for 2022-23. Firms want to invest, but are pushing out their timelines. Machinery and equipment investment rose broadly in line with expectations and 2021/22 capex plans strengthened by seven percent compared with the previous estimate.”

“Both mining and non-mining capex plans have achieved double digit growth compared to the corresponding estimates for 2021/22. This is due to not only a pushing out of timelines, but also strong underlying demand for business expansion amidst high capacity utilisation rates and a resilient labour market and household sector” Timbrell added.

Comment on this article


Your comments will not be published. Required fields are marked *


Please enter the word you see in the image below:


Subscribe to our mailing list

Sign up now to keep up-to-date with the latest
market news and insights in B2B banking.

* indicates required

For more information please read our Terms and Conditions and Privacy Statements.