Manufacturing activity fell during December due to weak demand and the strong dollar, according to the latest Australian Industry Group-PricewaterhouseCoopers Performance of Manufacturing Index.
The index fell by 1.3 points to 46.3 – well under the 50 point level separating expansion from contraction. The clothing and footwear, textiles and wood sub sectors recorded the largest declines.
AIG chief executive Heather Ridout said in a statement that the high Australian dollar is making it harder for the industry to recover.
“The continuation of flat conditions in the sector reflects accumulating structural pressures mounting on the industry along with other trade-exposed sectors in the wake of the mining boom,” she said.
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“These pressures look set to continue due to the strength of commodity prices and the levels of investment we are seeing in the mining sector.”
PwC head of industrial manufacturing Graeme Billings also said in a statement that growth had slowed over the last four months of the year.
“In the face of these declines in activity and the continuing slump in new orders, it is imperative that businesses continue to search for efficiencies, improvements and innovative approaches to their markets, products and business models.”
Insurers say it’s still too early to estimate the damage caused by floods in Queensland, with companies including Munich Re, Swiss Re and Hannover Re delaying any estimate of the cost.
“It is not yet possible to put an exact figure on the extreme floods in northeastern Australia,” Munich Re said in a statement.
“Many mines have had to stop operations. Heavy rain in this region is nothing unusual and such weather patterns are accentuated by the prevailing (climate) conditions.”
Meanwhile, building products company Boral has told the Australian Financial Review that it currently has $1 billion which it can use to acquire new companies without having to raise capital.
“I think it’s a great time to buy US assets, you’ve got the dollar at par, it’s the bottom end of the cycle,” chief executive Mark Selway told the publication.
“We believe quite clearly that the US market will come back… If it doesn’t, I think the whole world’s going to be in a little bit of trouble, not just Boral.”
Local shares flat on year’s first trading day
The Australian sharemarket has opened flat for the first trading day of 2011, despite strong leads overseas from both Wall Street and European markets.
The benchmark S&P/ASX200 index was down 3.54 points or 0.07% to 4741.7 at 12.20 AEST, while the Australian dollar has maintained its position at US101.9c, after reaching a high of $US102.5c over the weekend.
AMP shares dropped 0.8% to $5.25 as Commonwealth Bank shares fell 0.3% to $50.60. Westpac dropped 0.2% to $22.16 as NAB gained 0.3% to $23.76.
Software giant Microsoft has apologised for a glitch that brought down its Hotmail service over the weekend, after thousands of users found they could not access certain messages.
“Beginning on December 30, we had an issue with Windows Live Hotmail that impacted 17,355 accounts,” executive Chris Jones said on the company’s blog.
“Customers impacted temporarily lost the contents of their mailbox through the course of mailbox load balancing between servers… We’re very sorry for the inconvenience this may have caused to you, our customers and partners.”
Jetstar Australia-New Zealand chief executive David Hall has told the Australian that the company may expand into Singapore and New Zealand during 2011.
“You could see an Auckland-Melbourne-Singapore, Singapore-Auckland-Melbourne-type proposition,” he said.
News Corp tipped to sell MySpace
New reports indicate News Corp may sell off the troubled social network MySpace during 2011, after losing ground to Facebook over the past few years.
CNBC business television has reported that News Corp will sell the company by mid-year, and will lay off half its staff as the company attempts to turn itself around.
MySpace has already gone through several repositioning strategies, including three chief executives, in an attempt to make up lost ground to Facebook.
The site recently relaunched its design in an attempt to emphasise music and entertainment, but it has still failed to bring in new users.