BUSINESS NEWS

RBA HOLDS AT 5.5%
The Board of the Reserve Bank of Australia at its first meeting for 2006 has held the basic cash interest rate at 5.5 percent for what is now 11 months. They made no comment on the state of the economy in today’s statement.

OVERVIEW OF THE ECONOMY AND INTEREST RATES
Now that all the over-zealous forecasts for 2006 have had time to settle with the stock market has undergoing its first mini-correction. The new year has been welcomed by most analysts as one of continued reasonable growth rate, with a figure of 3.1 percent being generally agreed.

Along the way there will be casualties. With inflation being forced up by the increasing cost of oil, unemployment rising to 5.3 percent and the foreign debt hitting previously unthinkably worrying levels driven mainly by increased number of consumer products and expensive oil imports.Interest rates will be forced up with a rise of 0.25 percent maybe mid-year.

In the meantime, the recent CPI rate of only 2.8 percent for the past quarter shows inflation is currently the lowest it has been for a couple of years, which should suppress any cash rate lift for at least another 3 months.

EXTERNAL TRADE
The bright spots for 2006 include the narrowing of the trade gap in the latest set of figures. Foreign trade specialists insisting the Japanese economy is finally coming out of its long recession and boosting demand for Australian exports. They also say China will build on its present position as our second biggest buyer.

JOBS FOR CONFIDENCE
Both business and consumer confidence surveys are showing a lift which is on the positive side, but jobs-wise, the situation is confusing. Whereas Australian Bureau of Statistics says there has been three quarters of gradual dropping of new jobs, private surveys insist jobs advertised on line have increased by nearly 25 percent with sales and marketing showing the biggest growth.

Certainly the number of jobs advertised on the internet in January which increased by over 6 percent indicate a positive trend. Unemployment levels remain unchanged at 5.1 percent. For those who continue to believe that housing reflects the life beat of the economy, the situation continues to show only small growth as prices barely move upward but at least the number of home loans has been rising for the past two years.

PERSONAL WEALTH & DEBT
Finally, the Bureau of Statistics together with the Federal Treasury have recently concluded the average wealth of every person in the country to average out at $310,000, a rise of nearly 12 percent in a year. However, personal debt leaped nearly 15 percent to over $22,000 per capita.

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