INTEREST RATES OUTLOOK
RBA HOLDS AT 5.5%
The board of the Reserve Bank of Australia has held firm with
the basic cash interest rate remaining at 5.5 percent for the
sixth consecutive month. They made no comment in today's statement
on the economy.
AUSTRALIAN ECONOMY
SNAPSHOT
RBA CONFIDENT
The last quarterly statement from the Reserve Bank of Australia
shows the national economy to be bubbling along nicely with interest
rates having settled to present levels. It said the present inflation
of over 3 percent is unlikely to increase much in the foreseeable
future so no drastic interest rate increases should be needed
before 2007. However, the RBA did warn that a break-out in inflation,
such as fuelled by rising house and petrol prices, could force
a rise. Additionally, they were confident that wages which are
increasing by around 4 percent are within budget estimates. And
the all-important retail sales figures are still flat.
CONSUMPTION
The rising price of petrol is the only worrying factor now hitting
spending and confidence. Official figures say the rate of new
home loan statistics show the total number has dipped slightly.
The dulling of the growth in this sector is having its effect
on the all-important building industry which is now forecasting
the continued stagnation of new home building. There are fears
that the 60 percent rise in oil price in the last year with its
effects on petrol is dulling consumer spending. The low level
of unemployment continues to break all records. For the eleventh
consecutive month, more new jobs were created which makes the
current unemployment rate under 5 percent.
STRENGTH SHOULD CONTINUE
All present indicators say the Australian economy has just passed
the marker for 14 years of continuous economic strength, arguably
the longest on record. And the more this continues, the more the
numbers of experienced economy watchers insist it all cannot continue.
This is now producing various warnings, with the effects of the
present international situation being the most worrying. But the
latest Australian economic data indicates both GDP and business
investment continue to be positive. Looking for the most growth
within the various industry sectors shows the insurance business
to be enjoying the biggest single sector boom currently, just
ahead of food, car retailing and property services & construction.
On a closing note, confounding most predictions, last month's
new vehicle sales in Australia set another record with only large
4WDs taking a dive.
BUSINESS NEWS
DEBTOR FINANCE CONTINUES TO BOOM
The latest figures from the Institute For Factors and Discounters
show turnover continued to grow with a very healthy increase over
last year. To the end of June, the annual turnover totalled $34
billion, a 27 percent growth over last year's figure of $27 billion.
Additionally, the numbers using Debtor Financing again grew to
the extent that over 4,000 businesses are now utilising this form
of finance.
PROFIT SEASON BEST EVER
With BHP Billiton topping the ratings with a bumper result, so
the reporting season is yielding the most number of impressive
results on record. About half the companies which have announced
their annual results are well up on last year. This is having
the predictable effect of pushing the stock market to continued
new heights.
THE GOOD, BAD & UGLY
When the All Ordinaries Index passed the 4500 mark on the first
day of September, it not only set another milestone and did so
in record time after the comparatively recent passing of 4000.
On the other end of the confidence scale, is Telstra's new management
team and the way they are talking down their shares, inevitably
clashing with Government objectives. At the rate prices are falling,
T3 may have to be postponed.
IT HAD TO HAPPEN
In little more than a year since floating, the Google internet
search facility is now among the highest valued single media businesses
in the world. With a face value of $80 billion it is larger than
Time-Warner. There is now much speculation as to whether this
is a return to pre-2000 over-confidence in the I.T. sector.
