Stockmarket falls further: Economy roundup
Tuesday, January 8, 2008/
Australian stocks continued to fall further this morning, adding to yesterday’s sharp 2.3% fall as US recession fears worsen.
The benchmark S&P/ASX200 index closed yesterday at 6161.6 points before heading south to 6140.6 at 1.00pm today.
Investors are pinning their hopes on a speech on Thursday from US Federal Reserve chairman Ben Bernanke as to whether the US central bank will cut rates significantly at its meeting at the end of January.
Business executives are already becoming jittery about the year ahead. The latest Dun & Bradstreet business expectation survey says that interest rates and petrol prices are the primary concerns in the quarter ahead.
The tightening credit market and inflationary prices is placing pressure on businesses, with more than half the executives surveyed expecting to increase selling prices in the March quarter. And expectations for sales and profits growth have fallen for the fist time in four quarters.
Meanwhile there is some positive news on the November dwelling approvals and on the takings from the Christmas retail period.
After a relatively flat few months, there was a sharp 8.9% spike in apartment approvals in November. The rise follows a 3.6% fall in October and an 8% jump in September. The result was way above expectations.
A massive spike in apartment approvals in NSW (+67.5%) was mainly responsible for the November jump. This is likely to be due to several large multi-unit developments gaining approval in the month.
Private house approvals saw a more moderate rise, up 0.3% for teh month after a 1.6% gain in October and a 3.2% rise in September.
Peak retail industry body the Australian Retailers Association (ARA) said the 2007 Christmas period exceeded expectations with cash registers across the country ringing with $36.5 billion in retail sales.
According to ARA executive director Richard Evans, although the figures are in line with original projections, expectations for the 2007 Christmas period were lowered to $35.4 billion after the interest rate rise in November.
“Retail sales from mid-November to Christmas eve are up 7.4% on last year, making it the largest increase in close on a decade,” Evans said.
On a state basis, NSW sales accounted for $12.1 billion (33%), Victoria $8.8 billion (24%), Queensland $7.4 billion (20%), WA $4.1 billion (11%) SA $2.6 billion (7 %), Tasmania $747 million (2%), ACT $395 million (1%), NT $390 million (1%).
“Obviously consumer confidence is still high across Australia and recent interest rate rises, which have perhaps been offset by recent tax cuts, did not dampen consumer spending over the Christmas period.
“Many home owners are also ahead of their mortgage payments thus reducing potential impact of the Christmas spend. We also don’t see petrol prices affecting retail sales over this period,” Evans said.
Key categories included food ($13.5 billion), household/entertainment ($5.3 billion), hospitality ($5.1 billion), department stores ($3.6 billion), clothing and footwear ($2.5 billion) and recreational ($1.7 billion).