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HSBC expects the cash rate to remain on hold when the RBA board meets next week, after new data showed the nation’s capital expenditure fell by less than expected.
Data for the first quarter of 2013 found capital expenditure dropped by 4.7 per cent.
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Buildings and structures expenditure decreased by 5.5 per cent, while machinery and equipment fell by 3.3 per cent.
But while capital expenditure did fall, the drop was not as large as had been predicted.
“There was significant angst in the investment community about the possibility that today's capital expenditure survey could deliver big downward revisions to the Australian investment outlook. As it turned out the data were generally more positive than expected,” HSBC chief economist Paul Bloxham said.
“The focus, as usual, was on the survey of firms' future investment expectations. The worry stemmed from reports of mining companies shelving projects over the past quarter. But, as it turned out, today's survey delivered no such news. This largely reflects that many of the projects that have recently been shelved were never actually counted in the capital expenditure survey expectations. They were projects that have been on the shelf for many years and have been left on the shelf -- so to speak.”
Mr Bloxham said the expenditure survey continued to suggest that investment will rise in the coming year, rather than fall.
“Mining investment is set to plateau as a share of the economy, not plummet, and non-mining investment is set to rise next year. So, we expect the RBA to be on hold next week.”
