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.

SYDNEY (AFP)

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 and July.

SEOUL (Reuters)

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 percent.

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 $118.

BOSTON (AP)

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 Bullion Market.

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.

LONDON (AFP)

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 statement said.

“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.

TOKYO (AFP)