Japan has slipped into a technical recession, as consumer spending and new exports fall, although rebuilding from the earthquake and tsunami is expected to underpin growth in the second half of 2011.
The 0.9% fall in gross domestic product was worse than expected, and takes the annualised decline to 3.7%.
“Maybe the economy could grow slightly in the second quarter, but the problem is the pace of the recovery. The pace could be very slow and very far away from normalisation,” Seiji Adachi, senior economist at Deutsche Securities in Tokyo, told Reuters.
“I worry about the second quarter, which is the beginning of the new fiscal year. Many companies could revive down their capital expenditure plans.”
Full-time wages grew only 1%, seasonally adjusted, in the quarter to February, easing concerns the Reserve Bank will be pressured to raise interest rates next month.
The ABS figures show full-time earnings rose 1.2%, while all employee’s wages overall grew by 0.9%.
Building products company James Hardie has widened its quarterly loss, and says operating conditions in the US residential housing market have remained challenging, although the Australian business grew market share.
For the three months to March 31, James Hardie reported a net loss of $US347 million, versus a loss of $US84.9 million in the previous corresponding period.
Total sales for the quarter lifted 5% to $US488.4 million, while net operating profit – excluding asbestos, ASIC expenses and tax adjustments – rose 41% to $US33.3 million.
The company, which recently announced a share buyback, also tipped relatively robust activity in Australia despite dampened demand due to interest rate rises.
Pallet supplier Brambles has said it is still targeting an annual profit of between $US740-780 million for the 2011 financial year after a positive sales result in the March quarter.
“Subject to unforeseen circumstances, Brambles continues to target the midpoint of its guidance range for operating profit before interest costs and tax of between $US740 million and $US780 million, at June 30, 2010 exchange rates,” the company said in a statement.
“This guidance is prior to the contribution of IFCO Systems, which Brambles will consolidate in its results for the three months ending June 30, 2011.”
Sales revenue for the nine months ending March 2011 rose by 5% to $US3.27 billion. Chief executive Tom Gorman says the growth is due to expanding into new territories, although he warned there are some areas where production is weak.
“However, conditions in our largest European markets remain challenging, and the recovery in consumer activity in the USA has been modest to date,” he said.
The Australian sharemarket has opened higher today following a solid night on Wall Street where stocks rebounded due to positive performances in commodities.
The benchmark S&P/ASX200 index gained 56 points or 1.2% to 4750.2 at 12.00 AEST, while the Australian dollar also remained flat at $US1.06.
AMP shares rose 1.92% to $5.31 as Commonwealth Bank shares gained 1% to $52.32. Westpac rose 0.83% to $23 as NAB rose 1.93% to $27.46.
On Wall Street, the Dow Jones Industrial Average gained 80 points or 0.60% to 12,560.8 due to commodity prices and strong financial reports from computer maker Dell.
Transfield Services confirmed its 2011 guidance and said it will sell its North American unit for $US255 million.
“These aggregated non-cash accounting losses will be included in the 2011 financial year end statutory profit and do not affect the underlying earnings of Transfield Services,” Transfield said in a statement.
Managing director and chief executive, Peter Goode, said the sale is “the latest step in our strategy to focus our America’s business on higher value services in the two key sectors of Resources and Infrastructure Services”.
The money will be used to pay down debt.
Lawyers representing Dominique Strauss-Kahn, head of the International Monetary Fund, have applied to have him released on $US1 million bail and placed under 24-hour detention.
He has been held at a jail since Monday, when an earlier request for bail was rejected.
“We respectfully submit that these additional bail conditions eliminate any concern that Mr Strauss-Kahn would or could leave this court’s jurisdiction,” official court documents say, according to Reuters.
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