Asian Economic News

Australia Business Conditions Upbeat; Confidence Edgy- NAB July Survey 8/14/2007 4:13:18 AM

Australian business conditions, hit a new record high in July even as business confidence eased a bit given recent uncertainties, the National Australia Bank - NAB's latest survey indicated Tuesday. The National Australia Bank said, that the NAB index for business conditions rose 4.0 points in July to 20 points from the prior month, while the business confidence index fell 3.0 points to 12.0 over the same period.According to the survey, business conditions are pushed ahead in July mainly by surging levels of sales and profitability.The sub index for trading reached a new record high, putting on seven points to 31, while the gauge for profitability stayed at 20, up seven points from the prior month. However, despite the record readings for business sales and profitability, forward orders continued to decline. Conditions in the wholesale, transport and construction sectors showed strong improvements in the latest month.Meanwhile, the index for export sales fell to minus seven, down from zero a month earlier, while employment index fell one point to 10 over the same period. The report pointed out that in July, wages increased 1.1% at a seasonally adjusted basis, while quarterly wages growth was stable in the year to July at 5.1%. Capacity utilization stretched to 83.3% in July, up from 83.1% in the prior month.Differences in regional performance and confidence levels continued in July. Overall, the main upward movements in business conditions have been in Victoria and South Australia, reflecting the wealth effects from faster house prices, the report said.Business Confidence EdgyThe report said that the prevailing uncertainty in the financial markets and a combination of concerns about the US economy, commodity price expectations for mining and interest rate rise fears have impacted the fall in business confidence in July.However NAB said that even with a 3.0-point fall to +12 points in July, business confidence remained at a strong level.The falling confidence in Western Australia was the key downward driver on a state-by-state basis, the report said.Growth Outlook Little ChangedThe NAB said overall, the Survey was consistent with non-farm GDP growth of 3.5% in the year to July, with domestic demand logging 4.5% growth.The bank said the recent factors pointing to a weaker GDP outcome in the second quarter are more indicative of statistical volatility in the quarterly GDP estimates than any fundamental weakening. The bank cited a stronger base of the first quarter resulting in much variance while comparing the data.NAB's global forecasts little changed in July, but a US slowdown was cited a real and significant risk of moderate recession.Australian GDP forecasts unchanged at 4% in 2007 and 3.75% in 2008, the report said.The core inflation is expected to reach 3% in early 2008 before moving down to around 2.6% by end 2008, the NAB said. The purchase cost inflation continues to slow, with the annual rate down to 3.5% in the year to July, compared to around 4.5% last year.Retail price inflation accelerated somewhat in July, increasing by 0.8% compared to 0.2% growth in the previous quarter, the report said.

Chinese Retail Sales Growth Tops Expectations In July 8/14/2007 2:10:08 AM

Chinese retail sales growth came in better than expected in July, official data showed Tuesday.Retail sales grew 16.4% annually in July, following a 16% growth in June, the National Bureau of Statistics said. This was the largest growth since May 2004. Economists were looking for an annual growth of 16.2%. Total retail sales amounted to 699.8 billion yuan. Retail sales in urban areas advanced 16.7%, while in rural areas, retail sales grew 15.8%. Retail sales in urban area amounted to 476.2 billion yuan and rural retail sales totaled 223.6 billion yuan. Total sales of wholesale and retail sectors improved 16.5% to 592.4 billion yuan. Retail sales in hotel and catering industry totaled 92.3 billion yuan, up 18.0%. Clothing sales were up 24.9%. Sales of grain and oil rose 45%. Meat, poultry and egg sales surged 51.4%. Telecommunications equipment sales improved 6.1% and auto sales increased 42.7%. Household appliances sales gained 18%, while sales of furniture rose 31.9%. During January to July, total retail sales amounted to 4.9042 trillion yuan, up 15.5%. A report released on Monday showed that annual inflation accelerated to 5.6% in July, the highest annual inflation rate in ten years. The inflation rate increased from 4.4% increase in June.Last week, government data revealed that the trade surplus surged 67.0% from last year to US$24.4 billion in July. However, the report showed that the surplus fell 10.4% over the prior month, when it reached a record high of $26.9 billion.