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Australia Q4 capital expenditure figures beat expectations

Australia's private sector capital expenditure (CAPEX) rose 2% in Q4 beating expectations of 0.5%

Australian Bureau of Statistics (ABS) figures show private sector capital expenditure (CAPEX) rose 2% in Q4 beating expectations.

CAPEX rose by 2% in seasonally adjusted chain volume terms to $30.1 billion, exceeding forecasts of 0.5% increase. CAPEX had dropped 0.5 percent in the three months to September 2018.

The ABS figures show that Australian business investments were stronger in the December quarter (Q4) last year, which will provide a boost to the GDP, which is to be released next week.

CAPEX rose by 1.9% a year ago, driven by strong investment in plant and equipment.

CAPEX on building and structures rose by 3.2% to $161.1 billion, while investment in this category fell by 2.9% from a year ago.

Investment on equipment, plant and machinery rose by 0.7% to $14 billion, up significantly by 8.1% from a year ago.

The trend volume estimate for equipment, plant and machinery rose by 1.5% in the December quarter 2018 while the seasonally adjusted estimate rose by 0.7%.

Positive impact on Q4 GDP

The ABS figures will play a role in directly boosting Australia’s Q4 GDP report, after a plight of softer readings on retail spending and construction in the December quarter.

Estimates for CAPEX in 2019-20 came in at $92.1 billion, higher than the $90.5 billion level expected by financial markets, and 11% higher than the first estimate offered in 2019-19.

According to the ABS, the buildings and structures series is impacted by a sectoral change in the current quarter.

Aussie climbs on strong CAPEX

In early Thursday trading the AUD/USD was sitting just below $0.7143, and climbed higher after the better than expected capex, siting at $0.7160.

The climb comes just before Chinese CPI data which analysts predict would see AUD/USD rally.

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