INTEREST
RATES OUTLOOK
WHAT A DIFFERENCE A POINT MAKES
Just when most observers were convinced the flow-on effects from
petrol price rises had to force the RBA to lift the basic cash
rate, so the news of the employment reduction changed many minds.
Now analysts are confident the dulling of employment growth will
keep rates on hold. And to put it into perspective, the unemployment
rate went from 5 to 5.1 percent, which is among the key indicators
known to influence the RBA.
BUSINESS NEWS
HAPPENING NOW
Just in case anyone does not believe the rising petrol price is
forcing behaviour changes, the local auto industry is coming to
terms with the news that the Toyota Corolla is now outselling
both the Commodore and the Falcon to take the top spot. And in
the US, General Motors is currently running at an annual loss
of $US6 billion as the sales of its big cars and SUVs continue
to slump.
RETAILERS REPORT DOWNTURN
Across the board, leading retailers are now reporting reduced
sales in the last quarter. Among them is Harvey Norman who last
week reported its third quarter of only single digit growth which
the company blames the spending downturn.
NOT EVERYTHING TO ASIA
At a time when car makers are ditching many local parts suppliers
for Asian sourcing comes the news that Siemens VDO is about to
invest nearly $100 million into a new plant to make hi-tech car
dash assemblies. The company insists the manufacture of high-end
components has a strong future for local factories.
BUSINESS OUTLOOK
CONFIDENCE NOT SO MERRY
Many business analysts are endorsing the findings of the Westpac-Melbourne
Institute survey which found consumer confidence is now at a 30
month low. They say the fact that there are more negative attitudes
out there than positives means the up-coming Christmas spending
period is a big worry.
ALL HOPES ON COMMODITIES
Respected researcher Access Economics has issued a warning that
the current strength of the economy is too dependent on the commodities
boom. Their report says supply will catch up with demand and so
dull commodities prices. And with the next housing boom not expected
until 2007, this leaves 2006 as a time of risk for an economic
downturn.
BUSINESS INVESTMENT STILL STRONG
Despite the many worries with consumer spending, business investment
levels are holding up. The D&B Business Expectations Survey
found a rise in business optimism among executives during September.
This is being reflected in the continued level of business investment
which bank-lending levels confirm to be on the growth side.
