Building approvals fall 4.2% in November, Service sector contracts: Economy Roundup

Building approvals dropped by a seasonally adjusted 4.2% in November, according to the latest figures from the Australian Bureau of Statistics.

The figures show that 13,158 approvals were given, but on an annual basis this figure is 9.9% lower than during November 2009.

The estimate for private sector houses fell by 1.7%, with private “other” dwellings falling by 5.5% despite a rise of 22.1% in October.

The estimate for the value of new residential building dropped 4.9%, with the value of alterations and additions falling 11.7%.

The services sector contracted in December, according to the latest Australian Industry Group-Commonwealth Bank performance of services index, which fell by 0.2 points to 46.4, below the 50-point level separating expansion from contraction.

“This suggests that businesses are hesitating to spend in the face of fading expectations of a pick-up in sales,” AIG chief executive Heather Ridout said in a statement.

“Conditions certainly remain tough in the services sector with the Melbourne Cup day rise in official interest rates clearly evident at cash registers during December.”

Commonwealth Bank senior economist John Peters also said the data lines up against other weak figures, such as subdued retail spending.

“Other recent data have shown that nervous consumers are increasingly salting their cash away for a rainy day and paying down debt in anticipation of more RBA (Reserve Bank of Australia) rate hikes over the next year.”

Coca-Cola Amatil has reported that it now expects earnings before interest and tax to be less than previously expected due to unseasonably cool weather. EBIT is now set to grow by 5-5.5% in the second half, down from the previous forecast of 7-8%.

“However, second half net profit growth which benefited from lower interest and tax costs is expected to be 9-10% and is ahead of target,” the company said in a statement.

“Trading conditions throughout the summer period have been challenging with unseasonal weather and lower consumer demand affecting CCA’s major trading zones across Queensland, New South Wales and Victoria,” group managing director Terry Davis said.

Shares open flat on weak leads

The Australian sharemarket has opened flat this morning following a relatively weak lead from overseas, despite good economic data coming out of the US regarding private payrolls.

The benchmark S&P/ASX200 index was down 12 points or 0.26% to 4702.9 at 12.10 AEST, while the Australian dollar dropped below parity to US99c after the economic data was released in the US.

ANZ fell 0.9% to $22.98, while Commonwealth Bank shares fell 0.5% to $49.64. AMP gained 0.2% to $5.22 as Westpac lost 0.3% to $22.01.

As reported by The Australian, telco giant Telstra is now close to a deal with Foxtel in order to access content for the T-Box set-top box.

Sources have told the paper that Telstra will now be able to broadcast a limited range of Foxtel channels through the gadget.

It is understood the discussions have been made more complicated by the fact that Foxtel has a digital set-top box of its own.

Newcrest Mining’s joint venture with Morobe Mining has denied legal responsibility over allegations of damage through sediment at its Hidden Valley operations in Papua New Guinea.

“The issue and purported service of the writ… appears to be prompted by voluntary compensation payments being made by the joint venture to communities along the Watut River,” Morobe said in a statement.

“The payments were for flood damage to crops and gardens, to which mine related sediment may have contributed, along with natural events including land slips and major rain events.”

Payrolls increase in US

Private sector jobs increased by a higher than expected amount during December, in a new sign the country’s economy is beginning to recover at a faster pace.

ADP Employer Services said private employers added 297,000 jobs last months, representing the largest gain since 2000.

“Sometimes numbers come as bolts from the blue; this is one of them,” High Frequency Economics chief US economist Ian Shepherdson told Reuters. “Nothing in any other indicators of the state of the labor market last month – jobless claims, help wanted, surveys – suggested anything like this was remotely likely.”

The Institute for Supply Management index of national services has also reported that services activity rose to 57.1 points in December, the highest reading in four years.

On Wall Street, the Dow Jones Industrial Average gained 31.71 points or 0.27% to 11,722.90.

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