Private Capex Survey (Q2) & Building Approvals (Jul.)
Australia & New Zealand
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Private Capex Survey (Q2) & Building Approvals (Jul.)

Just 18 months after it got going, the recovery in private investment appears to be running out of steam. This partly explains why we estimate that GDP in the second quarter may have risen by just 0.5% q/q.
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Australia & New Zealand Economics Update

RBA probably won’t hike before the May election

Trimmed mean inflation will probably climb above the upper end of the RBA’s 2-3% target band in Q1, which would add to the case for the RBA to start hiking rates in May. However, the RBA hasn’t changed its policy rate in an election month since it started to announce monthly policy decisions in 2008. And with wage growth set to remain below 3% for now, we expect the Bank to wait until August.  

26 January 2022

RBA Watch

Surge in inflation will prompt first rate hike in August

The rapid tightening of the labour market coupled with the acceleration in underlying inflation will prompt the Reserve Bank of Australia to end its asset purchases at its meeting on Tuesday 1st February. And we now expect the Bank to hike rates to 1.25% by end-2023, with the first hike coming in August. Drop-In (08:00 GMT, 26th Jan): Will the RBA follow the Fed this year? Economists from our Australia and Markets services will talk through the likely path of RBA policy making in 2022 and the implications for Australian bond and currency markets. Register here.

25 January 2022

Australia & New Zealand Data Response

Australia Consumer Prices (Q4 2021)

The strong rise in underlying inflation at the end of last year means the RBA is all but certain to end its asset purchase scheme at its meeting next week. And with underlying inflation now above the mid-point of the RBA’s target, the Bank will come under increasing pressure to hike rates this year.  

25 January 2022

More from Capital Economics Economist

China Economics Weekly

Inflation fears overdone, more policy tweaks

Chinese consumers appear to have become more worried about inflation recently. But these concerns may reflect a broader sense of unease among households in response to a weakening labour market rather than about inflation itself, which seems likely to remain fairly contained. Policymakers, for their part, still seem more concerned about slowing growth than about inflation risks and have continued to expand their efforts to lower financing costs and boost lending.

7 September 2018

Japan Economics Weekly

Abe delaying retirement, Q2 growth strong

Prime Minister Abe is set to remain in power for another three years following the LDP leadership elections. One of the few substantive reform proposals he has put forward is an increase in the retirement age beyond the current 65. While this would reduce pension spending, it is less certain whether it would increase employment among the elderly. And any change wouldn’t be implemented for a couple of more years.

7 September 2018

Australia & New Zealand Data Response

International Trade (Jul.)

It looks as though the contribution to real GDP growth in the third quarter from net exports will be similar to the 0.1 percentage point added in the second quarter. But the near-stagnation in imports in July provides some tentative evidence that domestic demand may have softened.

6 September 2018
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