The Australian economy has entered a new growth phase that could last for years due to mining investment and a growing population, Reserve Bank of Australia deputy governor Ric Battellino has said in a speech.
Battellino said the domestic economy has performed better than expected, and is likely to benefit from increased growth in Asian regions.
“With the economy having only recently entered a new upswing, it is reasonable to assume that we will see this growth extended for a few more years yet,” he said at a housing industry conference.
“While the world economy as a whole is forecast to remain relatively sluggish next year, economic growth for the group of countries that comprise our major trading partners is expected to recover to a relatively normal pace.”
He also pointed to resource investment in the country, particularly in the areas of mining and liquefied natural gas projects.
“If this scenario eventuates, it will have powerful and broad-ranging implications for the economy,” he said.
Meanwhile, an index of advertisements for skilled jobs has reached its highest point in seven and a half years, according to the Department of Education, Employment and Workplace Relations.
Skilled vacancies have jumped 2.4% during November, following a 1.9% increase in October. Vacancies have risen by 1.1% for professionals, 2.3% for associate professionals and 3.1% for trades.
Australian construction activity has risen by a seasonally adjusted 2.2% during the September quarter, according to the latest results from the Australian Bureau of Statistics.
The figures show a total of $39.63 billion worth of construction work was completed in the quarter, while construction work for the second quarter was revised to show a 4.5% rise, compared to a reading of a 0.1% decline earlier in the year.
Building work rose 2.6% to $18.67 billion, while residential building gained 2.8% to $10.59 billion. Non-residential building work gained 2.3% to $8.08 billion, with engineering work also gaining 1.8% to $20.95 billion.
Sharemarket opens higher after Wall Street losses
The Australian sharemarket has opened higher today despite slightly negative results from Wall Street overnight, where investor confidence was too low to be rescued by an upgrade to the Fed’s economic outlook.
The benchmark S&P/ASX200 index was up 9 points or 0.21% to 4694.8 at 12.00 AEST, while the Australian dollar also rose to nearly US92c.
Commonwealth Bank shares lost 0.6% to $52.40, while ANZ shares gained 0.3% to $21.95. Westpac lost 0.6% to $23.81, as NAB lost 0.2% to $27.94.
Credit ratings agency Standard & Poor’s has said that many of the world’s largest banks, including Australia’s major lenders, do not have sufficient funds to cover lending exposures.
According to a study of 45 banks around the world, no Australian banks have been included in the few that were deemed to meet the minimum threshold to be considered safe.
Mining giant Rio Tinto has entered into an exclusive agreement with Kerry Stokes’ Iron Ore Holdings to purchase and transport up to 1.5 million tonnes of iron or from the Phil’s Creek deposit, according to The Australian.
Rio has also reportedly agreed to examine IOH’s deposit on the Iron Valley.
BHP director David Morgan resigns
Also in the mining industry, BHP Billiton director David Morgan has now resigned from the company’s board, after accepting the managing director position at private equity firm JC Flowers.
“I have thoroughly enjoyed being part of the Board during a period of change and tremendous challenges. I wish the company and my Board colleagues every future success,” Morgan said in a statement.
In the US, new data from the Commerce Department reveals the economy grew more slowly than expected during the third quarter, but housing prices continued to rise for a fifth consecutive month accompanied by a rise on consumer confidence.
The new data, a second estimate of third quarter GDP, revealed growth of 2.8% rather than the initial 3.5% recorded last month.
That data was accompanied by a statement from the Fed, which said officials are confident the economic recovery will continue but employment is likely to be a problem for some time.
“Most participants now view the risks to their growth forecasts as being roughly balanced rather than tilted to the downside,” according to the Fed’s minutes of its latest meeting.
“Some negative side effects might result from the maintenance of very low short-term interest rates, including the possibility that such a policy stance could lead to excessive risk-taking in financial markets or an unanchoring of inflation expectations.
The news wasn’t enough to give confidence to investors on Wall Street, where the Dow Jones Industrial Average dropped 17.24 points or 0.16% to 10,433.71.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
