Another survey has revealed high consumer prices, with the TD Securities-Melbourne Institute inflation gauge lifting 0.3% in July, driven by higher food prices and utilities.
According to the gauge, inflation is now running at an annual rate of 3.2%, just outside the RBA’s target band of 2-3%.
“There are considerable offshore headwinds associated with the United States and European sovereign debt issues, threatening the global economic recovery,” TD Securities head of Asia-Pacific research Annette Beacher says.
“Closer to home, declining credit growth and the cautious consumer sentiment confirm that the economy is truly two-speed, overshadowing the ongoing good news of the private sector investment boom.”
The Reserve Bank is set to meet tomorrow, with the market divided on whether a cut, halt or increase is on the cards after a higher-than-expected 0.9% increase in CPI figures last month.
Meanwhile, the Australian Industry Group-PWC performance of manufacturing index shows activity slid in July, with the carbon tax named as one of many factors weighing down sentiment.
The index fell 9.5 points to 43.4 in July, taking the measure back below the 50 level that marks the threshold between contraction and expansion.
“I defy anybody to say with any degree of certainty what the impact would be on the Australian economy if the dollar remains at current levels for a protracted period,” Australian Industry Group chief executive Heather Ridout says.
“This, together with the volatile and precarious state of international economic conditions and ongoing political uncertainty in Australia, are seriously undermining business confidence in large parts of the economy,” she said.
The Australian sharemarket has opened over 2% higher this morning after news the United States had struck a deal to extend its debt ceiling and pay down its deficit.
The benchmark S&P/ASX200 index was up 2% or 88 points to 4513.2 12.00 AEST, while the Australian dollar fell slightly after the announcement to $US1.10.
AMP shares gained 2.19% to $4.66, while Commonwealth Bank shares rose 2.78% to $50.64. Westpac rose 2.64% to $20.96 as ANZ gained 2.98% to $21.45.
Telco giant Telstra has handed its structural separation plans to the Australian Competition and Consumer Commission, both parties announced this morning.
The agreement highlights the plans between Telstra and the Government to separate the telco’s network, in order to make way for the National Broadband Network.
Chief executive David Thodey said in a statement that the submission has put the company closer to finishing its preparations for the network.
“Along with seeking shareholder approval, ACCC acceptance of the SSU (structural separation undertaking) and approval of the migration plan are critical conditions precedent to the definitive agreements signed in June,” he said.
“These commitments will provide faster resolution of perceived issues and will reduce unnecessary administrative costs for all parties,” he said.
The ACCC also put out a statement, saying that it had received the separation undertaking and a draft migration plan.
“The ACCC is required to undertake a mandatory 28 day consultation period in relation to the draft migration plan which deals with the timing of, and procedures involved in, the disconnection of end-users from Telstra’s fixed-line networks for migration to the NBN.”
“The ACCC also intends to invite comments from interested parties on Telstra’s structural separation undertaking over this timeframe.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
