Retail sales improved by a seasonally adjusted 0.2% in June, according to the Australian Bureau of Statistics, in a sign economists suggest will keep interest rates on hold for another month.
The ABS reported sales turnover came to $20.16 billion for the month following a 0.2% rise. A recent Reuters poll show the increase was in line with market expectations.
The ABS also reported dwellings approved during May fell by a seasonally adjusted 6.6% to 13,412. Private sector dwellings increased by 1.7% to 8,835, while private sector “other” dwellings fell by a massive 18.8% to $3,643.
Meanwhile, growth in the manufacturing industry slowed during June, according to the latest Australian Industry Group-PricewaterhouseCoopers manufacturing index.
The index itself dropped 3.4 points to 52.9, but stayed above the 50-point level separating contraction from expansion.
“While the performance in recent months points to a positive June quarter both for the sector and the broader economy, there remains a considerable way to go before manufacturing returns to the levels of activity of mid-2008,” AIG chief executive Heather Ridout said in a statement.
The survey’s measure of production dropped 7.9 points to 53.5, with the new index of new orders also falling 3.4 points to 51.2.
Additionally, the measure of employment fell by 2.6 points to 53, while the average wages growth index improved by 6.9 points to 64.9.
Grocery wholesale Metcash has acquired the Franklins supermarket group for $215 million, with the company’s shares moving up 3.3% after the deal was announced.
The Franklin Group comprises 85 supermarkets, including 77 corporate stores. The company said it proposed to implement a store sale program.
”Metcash expects the independent retailers who purchase the stores will lift each store’s performance through the successful combination of their own retailing expertise and through utilising the strength, services and support provided by Metcash,” Metcash chief executive Andrew Reitzer said in a statement.
Surfwear retailer Billabong has acquired Canadian group West 49 for $C83.2 million, in a move that comes alongside the company’s attempt to increase its presence in North America.
“West 49 is a complementary business and promises to be an ideal Canadian distribution platform for Billabong to showcase its brands and extend its reach,” Billabong chief executive Derek O’Neill said in a statement.
Billabong confirmed it intends to keep current West 49 management, including chief executive Sam Baio, who will continue to lead the business.
Sharemarket opens lower after Wall Street drop
The Australian sharemarket has opened lower again today for the first day of the new financial year, following another drop in Wall Street stocks overnight due to continued pessimism regarding an American economic recovery.
The benchmark S&P/ASX200 index was down 73 points or 1.74% to 4249.5 at 12.20 AEST, while the Australian dollar also opened lower at US84c.
Commonwealth Bank shares were down 2.3% to $47.54, while NAB shares also lost 2% to $22.81. Westpac lost 2.1% to $20.78 as ANZ fell 2.1% to $21.16.
Meanwhile, opposition resources spokesman Ian Macfarlane has told ABC Radio that the Coalition would rescind the mining tax if it wins government.
“It will be a deal done with the government holding a gun to the miners’ head,” he said of the suspected deal between the Gillard government and the mining industry regarding a tax compromise.
“On that basis alone, we would rescind the tax,” he said.
“I didn’t hear her saying to the treasurer (Wayne Swan), you can’t call these people ignorant liars,” he said. “I didn’t see her contradicting the (former) prime minister (Kevin Rudd).”
Debt problems in Europe, shares fall in US
Overseas, Moody’s Investors Service has said it is putting Spain’s credit rating under review, and could lower them as much as two levels due to increased financial challenges.
“If at the conclusion of the review, Spain’s ratings are lowered, it would most likely be by one, or at most two, notches,” Moody’s said in a statement.
“The contagion has been so dramatic in the markets in the last few months people forget really what a gulf there is between Spain and Greece… Spain is a very highly credit worthy country,” Moody’s senior risk analyst Kathrin Muehlbronner told Reuters.
“The policies that the government is now proposing to pursue should eventually reach in to the conscience of the market… but the issue where the deficit and debt has increased and we’re looking at a situation that is somewhat more difficult to unwind than it was before.”
The debt problems in Europe, and news of conflicting economic data, caused shares to drop in New York. Following yesterday’s 3% decline, the Dow Jones Industrial Average fell 96.28 points or 0.98% to 9774.02.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
