Three consecutive rate rises have done little to hurt consumers, with sentiment rising by 5.6% in January to 120.1 points, according to the latest Westpac-Melbourne Institute consumer sentiment survey.
The index rose from 113.8 points to 120.1 in January, with Westpac chief economist Bill Evans saying the result is above the level recorded in September before the Reserve Bank of Australia began to raise interest rates.
“Accordingly we expect to see another rate hike of 0.25% to be announced by the Bank on February 2 with the likelihood of another two increases of 0.25% each by June”, Evans said in a statement.
“In other convincing evidence that households appear to have comfortably absorbed the higher interest rates, we note that the confidence of those respondents who currently hold a mortgage has reached its highest level since 1994 when we first collected [home ownership] data.”
Additionally, Evans said the recent data from the Australian Bureau of Statistics showing unemployment falling to 5.5% in December suggests the jobless rate has peaked.
“Supporting the importance of the jobs market in buoying confidence we note that over the course of 2009 the Westpac–Melbourne Institute measure of how households assess their job security has improved substantially.”
“Four of the five components of the Index increased in January. All components are seasonally adjusted.”
The index measuring economic conditions over the next year rose by 6.8%, up by 117.9% over the year, while the index measuring whether it was a good time to buy a major household item rose by 7.7%.
Meanwhile, the estimate of the value of total building work rose by 1.6% to $18.5 billion in the September quarter after a 3.9% decline in the previous three months, according to the latest figures from the Australian Bureau of Statistics.
The seasonally adjusted estimate of new residential work rose by 2.8% to $9 billion, with work done on new houses climbing 6.5% to $6.3 billion. Other residential building fell by 4.7% to $2.7 billion, while alternations and additions rose by 3.9% to $1.5 billion.
The estimate of the value of non-residential building work fell by 0.2%, after a decline of 6.7% in the three months to June 30.
Consortium offers GM $US1 for Saab
In the motoring industry, a group of executives have offered General Motors exactly $US1 to buy the struggling Saab brand.
The group said it will save GM about $145 million in shutting down the brand, and comes after Dutch manufacturer Spyker has made a separate offer for the subsidiary.
“We are looking forward to a dialogue with GM next week. We don’t see any obstacles or problems… we haven’t had those kinds of indications at all,” Swedish businessman Lars Carlstroem told AFP.
The Australian sharemarket has opened nearly 1% higher today after positive leads from Wall Street and Europe, along with high commodity prices.
The benchmark S&P/ASX200 index was up 40 points or 0.82% to 4901.3 at 12.05 AEST, while the Australian dollar lost ground to US92c.
Commonwealth Bank shares rose 0.5% to $56.92, while Westpac also gained 0.1% to $25.73. ANZ gained 0.9% to $23.42, while NAB rose 0.2% to $27.50.
As reported in the Herald Sun, Westpac has begun to shy away from the home loans market after closing part of its Rams Home Loans group.
The publication reports Westpac has told mortgage brokers that borrowers on house-branded products will now face stricter lending criteria.
ACCC launches review into NAB’s AXA deal
The Australian Competition and Consumer Commission has launched an informal review into NAB’s proposed takeover of AXA Asia Pacific Holdings.
A decision is due on March 18, with the watchdog investigating the proposed deal which would see NAB buy all the shares of AXA and merge the local and New Zealand units.
Lend Lease has won a Western Australia government project worth $1 billion, which will see its subsidiary Delfin develop the state’s coastal city plans.
“Lend Lease brings an enviable track record for partnering with governments and landowners to deliver master planned communities that lead the way in community creation,” chief executive McCann said.
The plans include building new communities with sustainable living a major focus. The community is expected to include about 10,000 dwellings.
Meanwhile, employer confidence has increased for a third consecutive quarter, hitting a 16-month high, according to the latest Hudson Employment Expectations survey.
The report found confidence rose 10.6% from the last quarter, with 29.1% of employers now signalling an intent to increase permanent staff levels in the first three quarters of the year.
“It’s well above the record low in the June 2009 quarter, when sentiment was virtually zero. Australian hiring intentions are now drawing much closer to pre-downturn levels,” chief executive officer Mark Steyn.
Overseas, Wall Street stocks experience a rise, after investors flocked to healthcare stocks due to fears president Obama’s health reforms could be delayed. The Dow Jones Industrial Average gained 115.78 points or 1.09% to 10,725.43.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
