Retail sales up 0.2% in June, Building approvals down again: Economy Roundup

Retail turnover increased by a seasonally adjusted 0.2% in June, following a 0.2% increase in May and a 0.6% rise in April, according to the latest figures from the Australian Bureau of Statistics.

The result reflects the particularly volatile retail environment currently operating in Australia, with businesses struggling to deal with rampant discounting and frugal customers.

Food retailing recorded the highest increase of 0.4%, followed by clothing, footwear and personal accessory retailing at 0.4%, household goods retailing at 0.3%, cafes, restaurants and takeaway food at 0.3% and other retailing at 0.1%.

Department stores recorded a decrease of 0.1% during the month. Sales in Tasmania and the ACT remained flat, while Western Australia recorded a 0.1% decline.

Also revealed by the ABS, building approvals have continued to fall for a third consecutive month, dropping 3.3% in June after a 6.6% decline in May.

The figures show approvals fell to a seasonally adjusted 13,267 units in June. From the year to June, building approvals were up 13.2%.

The release adds weight to the belief the RBA will keep the official interest rate on hold at 4.5% when it meets this afternoon.

Nexus Energy shares have been placed in a trading halt ahead of announcement, following its shares rising by 30% due to reports the company has been approached about a possible $480 million takeover.

The oil and gas exploration company will remain in the halt until the announcement is made.

In other company news, education services provider Navitas has recorded a profit jump of 31% to $64.3 million, with total revenue up 18% to $556.7 million. EBITDA was $96.7 million, compared to $77.1 million during the previous corresponding period.

Chief executive Rod Jones said in a statement he expects solid earnings growth during the next financial year.

“The core university programs division again underpinned the sustained growth of the company,” the company said. Enrolments also increased by 10% to 15,724, compared to 14,306 in the previous semester.

Shares open higher after Wall Street lead

The Australian sharemarket has opened higher today, following a 10-week high on Wall Street where stocks rose due to a positive outlook on the economy from Fed chairman Ben Bernanke.

The benchmark S&P/ASX200 index was up 20 points or 0.44% to 4561.7 at 12.00 AEST, while the Australian dollar also rose to US91c.

Commonwealth Bank shares rose 1.1% to $54, while NAB lost 0.2% to $25.27. Westpac gained 0.5% to $24.32, as AMP rose 0.9% to $5.42.

In the mining sector, Fortescue Metals Group has forecast annual production to rise to five million tonnes per year, starting from the 2011 June quarter.

Chief executive Andrew Forrest is understood to be announcing today production and shipments will be maintained at a rate of 40 million tonnes per year until the new Christmas Creek was commissioned next year.

Oil producer Santos has announced its executive vice president and chief financial officer Peter Wasow will retire after eight years in the role. He will remain with the company until the end of the year, or when a successor is appointed.

“Peter has worked with enthusiasm and commitment over his career with Santos and I would like to recognise his strong contribution to this company,” chief executive officer David Knox said in a statement.

Also in the mining sector, the Government has named the mining tax advisory panel to be established if it wins the upcoming election.

The transition group will consist of former BHP chairman Don Argus, resources minister Martin Ferguson, along with former Woodside executive Keith Spence, former Rio executive David Kingler, Toro Energy chair Erica Smyth and KPMG chairman Chris Jordan.

Bernanke gives upbeat assessment of US economy

Federal Reserve chairman Ben Bernanke has given an upbeat assessment of the US economy during a Q&A session. He said the is economy improving, but is still yet to recover fully.

“We need to make sure that monetary policy continues to provide the support the economy needs until we begin to see growth, sustained growth and particularly growth in jobs,” he said.

“We have a considerable way to go to achieve full recovery in our economy, and many Americans are still grappling with unemployment, foreclosure and lost savings.”

Bernanke said consumer spending should increase as conditions improve, and said inflation will remain low over the next couple of years. Bank loan loss rates have peaked, although balance sheets still contain too many of these troubled loans.

On Wall Street, the assessment was welcomed by investors with the Dow Jones Industrial Average reaching a 10-week high after climbing 208 points or 1.99% to 10,674.38.