Money, Business, Finances

Australia business conditions improve in nov survey


SYDNEY Dec 10 A measure of Australian business conditions improved modestly in November as sales and profitability picked up, leaving most sectors relatively optimistic about the outlook for the next few months, a survey showed on Tuesday. National Australia Bank's survey of more than 600 firms showed most interest sensitive sectors reported better activity in November, while a lower local dollar seemed to benefit mining and manufacturing. The report's main measure of business confidence ticked down a point to 5, from an upwardly revised 6 in October, but was still well above the average for 2013. The survey's index of business conditions gained a point to -3 in November, with its measure of sales turning positive for the first time in over a year. Profitability also improved, though employment took a turn for the worse in the month."Business conditions, while still below trend, have trended higher over recent months, supported by the low interest rate environment, higher asset prices and less lofty Australian dollar," said NAB's chief economist, Alan Oster.

One positive was a broad based rise in the index of capital expenditure, which jumped 9 points to 5 in November, the highest reading since March of 2012. That would be welcome news to the Reserve Bank of Australia (RBA) which has been counting on a revival in business investment to offset the drag from a cooling mining boom.

The central bank cut interest rates to a record low of 2.5 percent back in August and has been holding steady since amid signs the stimulus was slowly working through the economy. Oster still believes that soft domestic demand and rising unemployment will lead the RBA to cut rates again, albeit not until May next year.

Tuesday's survey found firms reported that capacity utilisation had increased four tenths of a percent to 79.7 percent in November, though that still pointed to a considerable amount of slack in the economy. There was little sign of inflationary pressure in the NAB survey. Labour cost growth held steady at restrained levels, consistent with slack in the labour market, while purchase costs growth eased a touch. Overall prices growth softened further in November to be running at just 0.2 percent at a quarterly rate.

Australian business conditions weaken in june survey


SYDNEY, July 9 Australian business conditions weakened sharply in June as sales and profits both suffered from a lack of demand, though a drop in the local dollar seemed to lift optimism at some firms, a survey showed on Tuesday. National Australia Bank's monthly survey of over 400 firms was grim enough for the bank to change its forecasts for domestic interest rates, and it now expects a cut in August rather than November. The survey's main measure of business conditions dropped 4 points to -8, its lowest since May 2009, led by declines in sales and profitability. Indices of employment and forward orders both remained weak, while exports improved a little. Its measure of optimism did rise a point to 0, meaning optimists and pessimists were in balance. For a graphic click on: link.reuters.com/qar23t

"Most concerning was the collapse in retail, mining and manufacturing conditions, with retail activity deteriorating to its weakest level in the history of the monthly survey (since 1997)," said NAB's chief economist, Alan Oster."All of this weakness has come about despite relatively easy monetary policy settings and the recent depreciation of the dollar, which should be helping to improve competitiveness."

The Australian dollar has fallen almost 14 percent against its U.S. counterpart since April. The Reserve Bank of Australia (RBA) also cut interest rates to a record low of 2.75 percent in May and is ready to ease again if needed. Lower rates did seem to be helping some sectors with conditions in finance, business and property lifting to their highest level in two years. There was also a big improvement in confidence in the hard-hit manufacturing sector.

Investors think at least one more rate cut will be necessary to support activity as a long boom in mining investment finally levels off. Swap rates put the chance of an easing in August at 48 percent while interbank futures are fully priced for a move by November <0#YIB:>."We see the risks for the remainder of 2013 beyond August as skewed towards another cut, but heavily data dependent, particularly relative to the labour market deterioration we have currently factored in," added Oster. Inflation would seem to be no bar to a further easing with Tuesday's survey showing little pricing pressure in June. Final product prices fell for a second month while growth in labour and input costs moderated.

Business groups petition chinas premier on cyber rules


In a letter addressed to Chinese Premier Li Keqiang, 46 global business groups spanning finance, information technology, insurance and manufacturing urged Beijing to revise its draft cyber rules which they said would hamper trade. The signatories include industry associations from Asia, Australia, the United States, Mexico and Europe, according to a copy of the letter seen by Reuters. Foreign industry groups have made no secret of their concerns over China's draft cyber security law, which in June underwent a second of three parliamentary readings typically required before being adopted. They say the draft regulations, as well as cyber rules from China's insurance regulator, include provisions for invasive government security reviews and onerous requirements to keep data in China."Trade-inhibiting security reviews" for information and communications technology products and services under the rules may weaken security and constitute technical barriers to trade under the World Trade Organization, the groups said in the letter. Broad data residency requirements "would impede economic growth and create barriers to entry for both foreign and Chinese companies", they said, urging China to revise the rules.

"The current drafts, if implemented, would weaken security and separate China from the global digital economy."China's Foreign Ministry did not respond immediately to a request for comment on the letter on Thursday. Chinese officials have said the cyber security rules, along with internet restrictions including the blocking of popular foreign sites like Google and Facebook, are needed to ensure security against growing threats such as terrorism.

The first draft of the cybersecurity law, published more than a year ago, toughened user privacy protection from hackers and data resellers, but also boosted the government's powers to access and block dissemination of private information records that Chinese law deems illegal. It is not clear when the law may be adopted, but it could undergo a final reading by the standing committee of the National People's Congress, or parliament, later this year. The petition from the industry groups came as China prepares to host world leaders at the G20 summit in the eastern Chinese city of Hangzhou in September.

Beijing hopes it will be a platform to address slower economic growth and rising protectionism, even as it struggles to make difficult reforms at home. Foreign businesses in China are becoming increasingly pessimistic, in part due to rules that companies think could make it harder to operate there. The cyber rules have added to problems between China and its trade partners, from overcapacity in the steel sector to worries about Beijing's Made in China 2025 plan, which calls for a progressive increase in domestic components in sectors such as advanced information technology and robotics.

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Editor: Jan Paschal

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