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Thursday, 27 February 2020

CapEx burned again

Investment slumps

Private new capital investment is now finally increasing in Western Australia, as renewed mining investment begins to pick up. 

With the honourable exception of Canberra, everywhere else saw significant declines in the 2019 calendar year, and in some cases very significant declines.

Overall, this resulted in a disappointing 3 per cent decline in capital investment in the fourth quarter of 2019, and a 6 per cent decline over the year. 

The prospects for the first quarter of 2020 appear to be similarly bleak.

Mining capex is finally off the mat and trending slowly higher, but unfortunately services investment has gone into reverse gear with business confidence having been undermined.  

There was an optimistic year-on-year improvement in capex plans, but it's hard to place too much weight on these estimates given the potentially severe disruption to the global landscape now underway.

To date there's no sign of any slowdown in virus cases, with today marking a new high in the number of confirmed cases outside China (wherein data is generally considered to be opaque).


Opening calls for European markets look ugly again, and there's been some sharp moves in Fed funds pricing, with a cut priced in for April, and two by July.