Flood hits econ­omy

Townsville Bulletin - - Investor -

AUS­TRALIA’S e c o n o mi c growth will suf­fer in the first quar­ter of 2011, as busi­ness con­di­tions only partly re­cover from the Queens­land floods, a sur­vey shows.

Na­tional Aus­tralia Bank ( NAB) also warns in its monthly busi­ness sur­vey that there’s an ‘‘ ev­i­dent’’ multi-speed econ­omy.

The NAB sur­vey for Fe­bru­ary showed busi­ness con­di­tions rose mod­er­ately to mi­nus 2, from mi­nus six, to re­main be­low the zero level t hat sep­a­rates ex­pan­sion from con­trac­tion.

How­ever, busi­ness con­fi­dence rose 10 in­dex points, to 14 points in the month.

‘‘ The multi-speed econ­omy is again very ev­i­dent,’’ NAB s ai d i n a s t at ement ac­com­pa­ny­ing the sur­vey yes­ter­day.

‘‘ Al­though min­ing is get­ting back to nor­mal and re­cre­ation is do­ing well, a brace of do­mes­ti­cally fo­cused in­dus­tries con­tin­ues to suf­fer – re­tail, whole­sale, con­struc­tion and man­u­fac­tur­ing.

‘‘ Con­di­tions have soft­ened in WA ( West­ern Aus­tralia) and SA ( South Aus­tralia), and re­main poor in Tas­ma­nia – NSW now has the strong­est con­di­tions.’’

The bank also said the March quar­ter would ‘‘ stall’’ due to the dev­as­tat­ing floods.

The sur­vey showed or­ders re­mained weak and, de­spite re­build­ing of min­ing stocks, stocks de­clined.

The ca­pac­ity use rate was flat at 81.1 per cent.

The sur­vey also im­plies an­nu­alised do­mes­tic de­mand slow­ing two per cent in the six months to March.

NAB said soft un­der­ly­ing in­fla­tion and eco­nomic con- di­tions had caused the bank to re­assess its fore­cast for move­ments in the cash rate.

The bank says the Re­serve Bank of Aus­tralia ( RBA) will lift the cash rate from 4.75 to five per cent in Au­gust, in­stead of May as pre­dicted.

‘‘ The risk of an ear­lier or larger rate ad­just­ment lies with faster growth and es­pe­cially any sign of wage pres­sures.’’

In a sim­i­lar pri­vate sur­vey yes­ter­day, Dun & Brad­street found per­sis­tent con­sumer cau­tion drove sec­ond quar­ter busi­ness sales ex­pec- tations to their low­est level in 19 months.

The lat­est D& B busi­ness ex­pec­ta­tions sur­vey showed sales were down 14 points to an in­dex level of 17 for the June quar­ter.

The re­sult is the low­est of the past seven quar­ters, but still four points above the 10-year av­er­age.

The sur­vey of busi­ness ex­ec­u­tives, con­ducted i n Fe­bru­ary, also showed profit ex­pec­ta­tions fell four points to 13, still well above the 10-year av­er­age in­dex of six points.

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