Weekly Market Recap
CAPEX and consumer spending
Week in review
- Australia business confidence rises to 13 from -5.5
- Australian unemployment rate rises to 4.6%
- U.S. CPI inflation firm at 5.4% y/y
- China 3Q21 real GDP
- RBA monetary policy meeting minutes
- U.S. and Eurozone PMI surveys for September
Thought of the week
The spending power of consumers and the expected release of pent up demand is a well-documented reason to see the recent moderation of economic growth as a slowdown rather than the start of a down-cycle in economic activity. However, the consumer is only half the story and the supportive dynamics for companies to spend will add another pillar to the still robust global growth outlook. Capital goods shipments across G3 economies have greatly outpaced what was experienced coming out of the last two recessions (see chart). Extremely low financing costs, as well as record profits, means companies are flush with cash to spend. Some of this spending may also be in response to not being able to source enough labour. Either way, business surveys on capital expenditure intentions are near the peaks seen during the prior expansion, suggesting that corporate investment will continue in the year ahead.
G3 capital goods shipments
Rebased to 100 at start of recession
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