Dollar, stocks surge as confidence dips: Economy round-up
Monday, 29 October 2007
Mike Preston
Australian sharemarkets and the dollar surged to new highs today following strong results from the US and on commodities markets overnight.
By 12.36pm, the Australian dollar has hit a new 23-year-high of US92.5c, well up on last Friday’s Sydney close of US91.17c, while the S&P/ASX 200 is up 1% on Friday’s close to 6770.1.
But while equity and currency markets boom, things are a bit more staid and sensible in the real economy, with both the NAB Business Confidence Survey and Visa-VECCI Business Trends and Prospects survey both reporting a slide in business confidence.
The NAB survey reported a two-point decline in business confidence for the December 2007 quarter, although the measure remains nine points above the line separating negative from positive sentiment.
SMEs with turnover of $3 million to $5 million were the most confident, while very small businesses and larger businesses were more pessimistic.
By sector, non-residential construction and parts of manufacturing related to the resources/energy boom were the most optimistic, while non-food retailing, residential construction, parts of transport, wholesaling and manufacturing are less confident.
According to the Visa-VECCI survey of Victorian businesses, done in mid September, 26% of business owners anticipate that Australia's economic performance will be stronger during the next 12 months, down from 32% in the June quarter 2007 survey.
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Just over 20% of those businesses surveyed believe the state economy will experience stronger growth during the next 12 months, down from 28% in the June quarter survey.