Commonwealth Bank Business Sales Indicator shows signs of faltering recovery: Midday roundup
Monday, May 21, 2012/
Economy-wide spending rose in April but at the slowest pace in seven months, raising questions about Australia’s path of recovery.
The Commonwealth Bank Business Sales Indicator rose by 0.5% in trend terms in April following a 0.6% gain in March and growth of 0.8 % in January.
However, the trend growth of spending has eased for the past four months with spending falling by 1.3% in April after gains of 0.7% in March and 2.0% in February.
Craig James, chief economist at CommSec, said that at a sectoral level, six of the 20 industry sectors contracted in trend terms in April, up from five in March and up from four in February.
“What the BSI appears to confirm is that consumers are much more focused on ‘experiences’ now, rather than just goods,” says James.
“People have their TVs, computers and phones and they are saying what next? As a result, people are spending more on travel, going to concerts and getting in in-home help.”
Australian markets rally
The Australian stock market opened higher today following a market-wide sell-off last week that saw it tumble to a six-month low.
At the market open, the benchmark S&P/ASX 200 index rose 0.84% to 4,080.7 points and the broader All Ordinaries Index increased 0.76% to 4,130.1 points.
Ric Spooner, chief market analyst at CMC Markets, said a couple of events over the weekend have the potential to cause “at least a short-term breather” for markets.
“Firstly, the G8 statement that emphasised the need for growth is a reminder that the ultimate outcome of the current potential political process in Europe may be a positive,” Spooner said.
“Secondly, Premier Wen Jiabo’s statement giving ‘more priority to maintaining growth’ foreshadows further monetary easing and efforts to stimulate the domestic economy in China.”
James Hardie returns to profit
James Hardie Industries reported a net profit of $US604.3 million ($AUS613.16 million) for the full year to March 31, compared with a $US347 million loss in the 2011 financial year.
The result was boosted by $US485.2 million from a legal victory against the Australian Taxation Office in March.
However, the building products maker said it expects Australia’s residential construction activity to continue to contract in the coming 12 months.
Coalition to seek tax increase for Google and Facebook
Shadow communications minister Malcolm Turnbull has raised the possibility of increasing taxes on global technology giants such as Google and Facebook, saying that they are eroding Australia’s tax base.
Turnbull said a Coalition government will seek to make Facebook and Google pay more tax after Google Australia’s latest accounts showed that it had only paid $74,176 in local taxes according to the Australian Financial Review.
Google’s local operations posted total operating revenue of $201 million in 2011 and paid no tax on the $940 million generated in Australia by its search advertising business.