Fair Work Australia has ruled to raise the minimum wage by $26 per week to $569.90 effective July 1, with over one million Australians set to benefit from the decision.
Union groups had lobbied for a rise of $27 per week, after there was no increase last year due to the global financial increase. However, business groups said any rise should have been limited to $12.50 per week.
Business groups have said any wage rise will put pressures on inflation, and will hurt small businesses already struggling to prepare for changes to awards coming into effect on July 1.
Activity in the Australian services sector contracted during May as higher interest rates began to impact on consumer-related sectors such as retail and hospitality, the latest Australian Industry Group-Commonwealth Bank performances of services index has revealed.
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The index itself dropped 4.8 points to 47.5 points, negating the 3.4 point gain during April and taking the index below the 50-point level separating expansion from contraction.
“Services activity has been weighed down by the string of interest rate rises, which have dented both consumer confidence and business demand at a time of renewed volatility in global markets,” AIG chief executive Heather Ridout said in a statement.
“Sentiment remains uneasy and growth patchy in consumer-related sectors, while the weakness in new orders suggests continuing softness in activity.”
According to the Australian Bureau of Statistics, the trend estimate of balance on goods and services on a seasonally adjusted basis resulted in a surplus of $134 million in April.
Good and services credits rose by 11% or $2.1 billion to $22.6 billion, with non-rural goods up 18%, net exports of goods under merchanting up 65% and rural goods dropping 3%.
Goods and services debits rose $17 million to $22.5 billion, with non-monetary gold up 50%, consumption goods up 3% and capital goods up 1%.
Xstrata suspends $1.2 billion in projects due to mining tax
Mining giant Xstrata has suspended nearly $1.2 billion in coal and copper projects due to a review of its operations caused by the Government’s proposed super profits tax.
The company has said it will now suspend $586 million of spending on its thermal coal project in Wandoan, with another $600 million expansion project for the Ernest Henry mine also put on hold.
“The RSPT has created significant uncertainty for the future of mining investment into Australia and would impair the value of previously approved projects and exploration to the point that continued investment can no longer be justified,” Xstrata plc chief executive Mick Davis said in a statement.
“Our Australian management teams’ analysis demonstrates that the RSPT would significantly impact the value and cashflows of both of these projects.”
Davis also said the two projects include significant risks and total capital investment of over $6.4 billion, and that neither will be viable if the tax goes ahead.
Meanwhile, the Australian sharemarket has opened higher today due to a rally on Wall Street, where positive economic data has helped relieve investors’ fears over debt problems in Europe.
The benchmark S&P/ASX200 index was up 84 points or 1.93% to 4465.6 at 12.10 AEST, while the Australian dollar also increased to US83c.
ANZ shares gained 2.9% to $22.72, while Commonwealth Bank shares also rose 2.7% to $51.67. NAB gained 2.9% to $24.88, while Westpac rose 2.6% to $22.99.
Shares in crane company Boom Logistics jumped by 40% today after the company confirmed it was the target of a takeover offer from private equity group Archer Capital.
”Boom has not received any proposal from Archer or McAleese since Archer acquired a relevant interest in McAleese shares,” Boom said in the statement to the ASX.
”Boom has received a highly conditional, confidential and incomplete proposal from Archer to acquire Boom through a scheme of arrangement, at an indicative price of 52 cents per share.”
”In line with the recent market announcements, management are in the process of quantifying the impacts of the improved operating environment and the contract wins on the expected financial performance of the business,” the company said.
Job vacancies fall during May
Job vacancies dropped in May, with businesses concerned over the European debt crisis and rising interest rates, according to the latest IPA Recruitment Job Vacancies report.
The report revealed a drop in vacancies of 13.7% in May, following a 4% decline during April.
“(Australia) missed out on the worst of the GFC, but many are fearful we might finally have a real GFC coming,” IPA chief executive Rabieh Krayem said in a statement.
“Employers are adopting a just-in-time approach to recruitment for the moment. They are replacing natural wastage and topping up staff when needed… There is little in the way of big expansions in anticipation of future growth.”
Meanwhile, hedge fund Everest Financial Group has said it will suspend all new outlays as it attempts to recover the 29% share drop it has recorded during the past 12 months.
The move comes after major shareholder Wingate Direct Investments tried to oust the company’s board at the 24 May annual general meeting.
“At the current time, the business seems to have little future other than providing a few years’ income for employees, and no benefit to shareholders,” Wingate said in a letter to shareholders before the meeting took place.
In the US, investors were given a confidence boost by data from the housing industry showing pending home sales reached a six-month high in April. The Dow Jones Industrial Average gained 225 points or 2.25% to 10,249.54.