25/08/2009

A month of looming interest rate rises, forecasts of economic recovery, signing of Australia’s record high international deal, a steady improvement in unemployment rate, and RBA’s official “worst is over”. 

RBA says worst is now over

 

Well we all feared the Global Financial Crisis would eventuate into the next Great Depression with constant stream of media reminding us of how long and serious this GFC was going to be.  It turns out all that talk of doom and gloom may have been a big bluff according to Reserve Bank Governor Glenn Stevens who recently announced that the worst may well be over.   

 

Although he stated that nothing is yet certain and the Australian economy has definitely suffered a blow, he noted that the trend of Australia and major economic powers is looking “distinctively better”. 

 

BHP Billiton, Commonwealth Bank, Telstra and Leighton Holdings being the market leaders of their respective industries all showed a common trend in their latest financial results.  All four showed robust underlying earnings foreshadowing the governor’s confidence for recovery.

 

Companies reduce job cuts by reducing employees’ hours

 

With the official unemployment rate holding steady at 5.8 per cent in July rather than 6 per cent as anticipated by analysts, the Australian Bureau of Statistics said that the downturn appears to be less severe than expected.  Statistics showed that companies are reducing the working hours of employees’ rather than resorting to job cuts.  

 

The data revealed a significant improvement in full time job cuts with 16,000 full time job losses last month following a much higher 23,400 job cuts in June.  Many of the previous full timers turned to part-time jobs, soaring by 48,200 last month after a revised gain of 300 in June.

 

''The figures indicate that Australian companies have taken sensible steps to retain skilled workers where possible and in some cases offering for workers the option of converting to part time employment,'' Employment Minister Julia Gillard said. 

 

Business confidence all time high in 2 years

 

NAB’s recent survey shows that Australian businesses are more confident about their future since August 2007.  "The improvement was very broadly based but especially noticeable in construction, wholesaling, transport and manufacturing over recent months,'' NAB said.

The index, which is determined by respondent’s view on trading, profits and employment was higher in all three index points bringing the overall business outlook into positive territory. Mr Oster, NAB’s chief economist, said the survey's July results "clearly points to an accelerating growth momentum'' for the domestic economy.

Australia signs biggest single investment in history with China

Australia couldn’t have found a better time to sign the $41.3 billion US dollar deal to supply liquefied natural gas to China’s energy giant PetroChina.  It represents the single biggest deal in Australian history and is expected to create a tremendous boost for the Australian economy. 

"This agreement has enormous value for the Australian economy and society, generating the wealth we need to continue to develop our resources and technology, and sustain our communities," Resources and Energy Minister Martin Ferguson said late on Tuesday.

The deal is for PetroChina to buy 2.25 million tonnes a year of natural gas for the next two decades.