Services sector activity has rebounded thanks to two consecutive rate cuts last year, a new survey shows.
The Australian Industry Group/Commonwealth Bank Australian Performance of Services Index (PSI), released this morning, lifted by 2.9 points to 51.9 points in January.
Fifty points separates contraction from expansion.
There was growth in the accommodation, cafes and restaurants, finance and insurance, and personal and recreational services sub-sectors.
"The return of key sectors directly exposed to household spending to positive territory provides a tentative sign that the easing of interest rates towards the end of 2011 may have lifted consumer confidence despite the dampening stream of news coming from Europe," Australian Industry Group director of public policy Peter Burn said.
Commonwealth Bank of Australia senior economist John Peters said another rate cut in February would "help further 'fireproof' the local economy from any potential negative fallout from Euroland's chronic fiscal and debt woes".
"This should, in turn, give all sectors of the economy, including services, some further joy."
Australian sharemarket weaker as US waits on payroll figures
Meanwhile, the Australian sharemarket opened flat this morning but dropped in early trade, following a quiet night on Wall Street as the market awaits nonfarm payroll numbers to be released tonight.
At 11.40 AEST, the S&P/ASX 200 was trading 1.5% lower at 4266.3 and the broader All Ordinaries index was 0.4% lower at 4332.8.
Trading was mixed, with banks and the major miners higher but retailers mixed.
Ben Le Brun, market analyst at optionsXpress, says the high Australian dollar is "taking a chunk out of certain sections of the market".
"The Aussie dollar has been capped at 110 US cents in the past 12 months. A failure to break this level again would have technical analysts pointing to a triple top which could see downside pressure on the Aussie and have exporters breathing a sigh of relief," he says.
Greek negotiations in a tough spot
Negotiations over a write-down with private investors of Greek debt are at a difficult stage, Eurozone chief Jean-Claude Juncker has said.
"These negotiations are ultra-difficult," Luxembourg Prime Minister has said, according to Reuters.
Similar comments were made by Greek Government spokesman Pantelis Kapsis who has said the talks are "very difficult", telling Mega television that the cost of the decisions "will not be anodyne for our citizens".
Meanwhile, Josef Ackermann, who heads up Deutsche Bank, has said "we are very close and hopefully will reach an agreement within the next weeks or days".
"The question is, whether others contribute as well," he said, in reference to other European states and if they will accept a writedown of 70% in regard to Greek debt.
Banks are demanding the Greek Government adopt a new economic program that would include tough measures for its citizens.
Qantas lifts fares due to fuel costs, carbon taxes
Meanwhile, the national carrier Qantas has lifted domestic and international fares due to higher fuel cost and carbon pricing schemes in Australia and Europe.
"Higher jet fuel costs and carbon pricing will impact future ticket prices for Qantas and Jetstar passengers travelling domestically and internationally," it said.
From July 1, Qantas will introduce a one-way carbon surcharge of between $1.82 and $6.86.
Jetstar domestic fares will lift by $10 from July.
Clive Palmer mulls over media buy
Resources billionaire Clive Palmer has flagged a move into media, following Gina Rinehart's raid on Fairfax Media this week.
Palmer has told the ABC that Fairfax looks "very exciting".
"We've certainly got the money and we'd certainly like to see media in Australia become much higher (quality)," he said.
"She's a very, very smart woman so if she's going after Fairfax there must be something in it."
"Being in Fairfax, providing some service to the community, working with a person like Gina Rinehart sounds very attractive to me.
"Of course we'd want 30%, not 15, and we'd go much more aggressively to make sure the company got things moving."
