Fed: Strong CAPEX to give much needed lift to GDP

AAP General News (Australia)
08-30-2007
Fed: Strong CAPEX to give much needed lift to GDP

CANBERRA, Aug 30 AAP - Strong capital expenditure by businesses in the June quarter
will provide a much needed injection of growth to next Tuesday's gross domestic product
(GDP).

New private capital expenditure rose by a seasonally adjusted 6.3 per cent in the June
quarter to $20.897 billion, from an upwardly revised $19.717 billion in the March quarter,
data released today by the Australian Bureau of Statistics (ABS) shows.

This was much stronger than economists' median forecast for a rise of two per cent.

However, the ABS said the current account deficit was $15.988 billion in the June quarter
from an upwardly revised $15.545 billion in the March quarter.

Economists had been looking for a deficit of $15.7 billion.

Another tepid exports performance will detract 0.1 percentage points from GDP, although
this was not as weak as some economists had been expecting.

Prior to this week's data, economists' forecasts had centred on a relatively slim 0.5
per cent increase in gross domestic product (GDP) after sharp 1.6 per cent acceleration
seen in the March quarter.

Such a GDP outcome would see the annual GDP growth rate slip to 3.7 per cent from 3.8
per cent in the year to March.

These forecasts were based on retail trade during the June quarter having slumped to
its lowest level since September 2000.

However, construction work data released yesterday also proved unexpectedly weak, possibly
cutting 0.2 percentage points from growth, according to one economist.

MORE cb/sb/jm/bwl

KEYWORD: ECONOMY

2007 AAP Information Services Pty Limited (AAP) or its Licensors.