Q1 capex was weaker than expected, down by 4.7% qoq with mining capex down 6.2% qoq. Capex will detract about 0.6 pp from Q1 GDP, but there are other strong offsets from Q1 retail sales 0.6 pp and net exports 1.0pp. Q1 GDP ( out next Wednesday) is travelling around +0.8% qoq, certainly not soft and showing that other parts of the economy are already stepping up to cover the fall in mining spending. A more positive surprise in the capex report are the two surveys of 2012-13 and 2013-14 capex spending, only a 2.0% reduction in estimate 12-13 capex from 3 months ago to $A163.0bn and a surprise upward revision to 13-14 spending by 3.4% to $A156.5bn. Another big surprise was the April home building approvals report, up 9.1% mom, 27.3% yoy. A good split too with private homes up 2.5% mom, 18.9% yoy and private multi-occupancy up 18.0%, 37.2% yoy. Home building activity is about to lift very strongly. Housing has huge multiplier effects to employment and household spending and at this stage the economy looks like coping with the mining investment downturn considerably better than is allowed in official forecasts and most private forecasts too.
