Business confidence reaches seven-year high: Economy Roundup

Business confidence has jumped to a seven-year high during the September quarter despite a decline seen in the previous three months, according to the latest results from the NAB quarterly business survey.

The results show confidence moved to 16 points in the third quarter, up 20 points from the -4 reading in the June quarter. Chief economist Alan Oster said in a statement the results were encouraging.

“Since the bottom in early 2009, the remarkable turnaround in confidence has continued into [the third quarter],” he said. “Business conditions (or outcomes) have also continued to improve – albeit at much less subdued levels.”

But despite the good result, Oster said investment intentions have failed to keep on track with the improvements seen in both business confidence and condition levels.

“This divergence has very important growth implications and puts a real note of caution against overly optimistic growth expectations,” Oster said.

“Thus, while business capital plans have improved from the ‘Armageddon’ levels of early 2009, they still imply little to no growth in investment over the next six to 12 months.”

Meanwhile, the Federal Government and Telstra are continuing to disagree over the negotiations regarding the separation of the company’s wholesale and retail divisions, the Australian Financial Review has reported.

The report claims an analysis of the network has been released that places the value of Telstra’s core network at $33 billion, higher than the ACCC valuation of $7.96 billion. Telstra reportedly believes the figure is justified as its network would have to be built again following a separation.

But communications minister Stephen Conroy reportedly said the release of the information was a mistake.

The report comes after a Senate inquiry has given its approval to the legislation that would see the company separate its wholesale and retail divisions, recommending the legislation be passed immediately.

Shares fall due to Wall Street losses

The Australian sharemarket has fallen 1% this morning due to negative results overnight on Wall Street, where poor results were fuelled by fears of an abandonment of the federal home buyer tax credit.

The benchmark S&P/ASX200 index was down 51.4 points or 1.06% to 4778.9 at 12.00 AEST. The Australian dollar also lost ground to US91c.

Commonwealth Bank shares fell 0.5% to $55.71, while NAB gained 1.2% to $31.13. Westpac lost 0.3% to $27.46 as ANZ gained 0.2% to $23.85.

ING Industrial Fund has said it will undertake a $700 million fully underwritten capital raising to repay debt, and has forecast a 2011 net operating income per unit at 4.17c.

Chief executive Paul Toussaint said in a statement the capital raising will strengthen the company’s balance sheet.

“IIF will have increased financial flexibility which will enable management to evaluate earnings enhancing portfolio initiatives, including development of owned assets as market conditions improve and capitalising on acquisition opportunities.”

BHP Billiton mine strike continues

Overseas, copper production at the BHP Billiton Spence mine in Chile has been reduced to “a minimum” following a workers’ strike, the company has said.

“Today the talks are suspended,” said BHP Billiton spokesman Mauro Valdes in a statement. “Our production is reduced to a minimum and obviously we hope to resume the conversations as soon as possible.”

The negotiations between the workers’ union and the company are still ongoing.

In the US, new economic data has given some investors hope the beginning of a recovery is imminent. Economic and manufacturing activity increased for the mid-west and Texas regions, but a key figure of national economic activity fell.

On Wall Street, stocks fell due to rumours the property industry could be hurt if the federal new housing credit is removed. The Dow Jones Industrial Average fell 104.22 points, or 1.05% to 9867.96.