Bulletin – September Quarter 2012 Forecasting Business Investment Using the Capital Expenditure Survey Abstract

Business investment is a key driver of economic growth and is currently around record highs in Australia as a share of GDP. In compiling forecasts for business investment, the Reserve Bank uses a variety of different indicators, including information from liaison as well as survey measures of firms' investment intentions. The most comprehensive survey is the Australian Bureau of Statistics' (ABS) quarterly survey of Private New Capital Expenditure and Expected Expenditure (Capex survey). While firms' expectations of capital expenditure from the Capex survey are a useful guide for forecasting business investment, the relatively large forecast errors suggest that the Capex expectations data should be used in conjunction with other sources of information.

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