Business Global Scene
Australian economy heading for sustained growth
The Australian economy was likely entering a period of further
sustained growth, according to a survey released Wednesday, supported by
strong employment growth and business investment.
The Westpac-Melbourne Institute leading index, which indicates the
likely pace of economic activity in the next three to nine months, found
the annualised growth rate was 5.6 percent in August.
This figure compares with 5.3 percent in July and 5.4 percent in June
and is well above the long-term trend of 4.3 percent.
The coincident index, which measures current activity, rose 0.8
points in August to an annualized 4.5 percent due to a strong labour
market and growth in industrial production, Westpac said.
Although slightly slower than July’s 4.8 percent it was still above
the long-term trend of 3.7 percent, it said.
Westpac chief economist Bill Evans said analysts had previously
forecast that growth in the leading index could be on a sustained
downward path after a long robust period.
“However, this month’s reading points to clear recovery in the growth
profile,” Evans said.
“The recent low point in growth was well above long term trend, and
the subsequent reacceleration points to a sustained period of strong
growth in the Australian economy.”
Evans said the predictions were in line with the government’s
mid-year economic outlook, released Monday, which upwardly revised
growth figures for 2007/08 to 4.25 percent from 3.75 percent.
“Those forecasts imply a strong pick up in growth from 2006/07 —
consistent with the sustained message we have been communicating from
the leading index,” Evans said.
Key drivers of the improved growth outlook are consumer spending
supported by strong employment growth and business investment.
S. Korea’s unemployment rate steady at 3.2 per cent
South Korea’s unemployment rate held steady at 3.2 percent in
September, data showed on Wednesday, amid expectations that growth in
Asia’s fourth-largest economy would accelerate in the coming months.
The seasonally adjusted reading matched the 3.2 percent rate in
August, which was down from 3.4 percent in July, data from the National
Statistical Office showed.
The number of employed fell to a seasonally adjusted 23.43 million in
September from 23.49 million in August, the data showed. South Korea’s
monthly unemployment rate has kept to a range of 3.2 per cent to 3.5
percent since last year.
The figures come a week after the Bank of Korea left its overnight
call rate target steady at 5.0 percent for a second consecutive month
after a back-to-back rise by a quarter percentage point each in August
IBM’s 3Q earnings rise 6 per cent
Strength in services overcame a slide in hardware and helped
third-quarter earnings rise 6 percent at International Business Machines
Corp., enough to beat Wall Street expectations Tuesday.
From July through September, IBM earned $2.36 billion, $1.68 per
share, surpassing the profit of $2.22 billion and $1.45 per share that
the Armonk, New York-based technology bellwether posted in the same
quarter of 2006.
Earnings per share rose at a much steeper rate than net profit
because IBM’s aggressive stock buyback plan has taken 130 million shares
out of circulation in the past 12 months. Revenue in the third quarter
rose 7 percent to $24.1 billion from $22.6 billion a year ago.
However, IBM continued to benefit heavily from weakness in the
dollar, which makes deals cheaper for overseas buyers. If not for
currency fluctuations, this quarter’s rise in revenue would have been 3
Analysts’ consensus forecast was for earnings of $1.67 per share on a
shade under $24.1 billion in revenue, according to Thomson Financial.
IBM shares gained $1.57, 1.3 percent, to close at $119.60 before the
earnings report was released. In extended trading, the stock fell to
Gold price rockets to 27-year high
The price of gold soared Thursday to the highest level since 1980 on
the back of the weak US dollar, while platinum neared a record level on
fresh supply woes, analysts said.
Gold prices leapt as high as 748.10 dollars per ounce on the London
Platinum, meanwhile, hit 1,399.25 dollars an ounce on the London
Platinum and Palladium Market. That was close to its record high
1,402.50 dollars hit in November 2006.
The high points came as the European single currency bounced back
above 1.42 dollars, rising close to its record high 1.4283 dollars that
was struck on October 1.
Gold tends to rise when the US unit weakens because it makes
commodities that are priced in dollars cheaper for buyers using stronger
currencies, analysts say.
“Gold prices strengthened again as US dollar weakness underpinned
solid gains,” noted analysts at Barclays Capital.
The precious metal is also supported by strong crude oil prices,
which in turn spark inflationary concerns. However, gold is regarded as
a safe bet in times of rising inflation.
Platinum, already beset with tight supplies, took another hit on
Thursday from fresh concerns in South Africa. “The rise in (platinum)
prices has been supported by concerns over supply following news of
electrical power shortages in South Africa — the world’s largest
producer of platinum,” added Barclays Capital analysts.
Sanyo gives up on sale of semiconductor unit
Japan’s Sanyo Electric Co. said Wednesday that it had decided against
a sale of its semiconductor business as part of its efforts to return to
the black after three straight years of losses.
The ailing electronics maker decided to retain the semiconductor unit
“as a key operation” in its component and device division, a company
“Sanyo will continue to take measures to expand and develop this
business,” it added.
The announcement rattled investors, with the price of Sanyo Electric
shares plunging 14 yen or 7.1 percent to 182 by the lunch break.
Sanyo had reportedly been negotiating with Japanese buyout firm
Advantage Partners over a possible sale of the chip business.
The fund had offered to buy the unit for 110 billion yen (940 million
dollars) and was granted priority negotiating rights, according to the
Nikkei business daily.
But with global credit conditions tightening, the Advantage Partners
failed to raise enough capital to buy the business, it said.
Sanyo is struggling to return from the red amid fierce price
competition. A scandal over alleged window-dressing of its accounts has
only added to its woes.
After suffering an annual net loss for the past three years, Sanyo is
increasing its focus on rechargeable batteries, which have been a bright
spot in its otherwise lacklustre recent performance.
Last year, Sanyo issued 2.6 billion dollars’ worth of new shares to
Goldman Sachs, Daiwa Securities SMBC and Sumitomo Mitsui Banking, which
together took five of the nine seats on the company’s board.