Economic growth weaker than expected as GDP rises just 0.2% in September quarter: Economy Roundup

The Australia economy grew by only 0.2% in the September quarter, according to the latest figures from the Australian Bureau of Statistics. The result is well below expectations of a 0.5% increase.

On an annual basis, growth was 2.7% to September 30th, while analysts predicted growth for the year would be at 3.5%.

The figures found the largest contributor to GDP was household spending at 0.3 percentage points, with the main detractor was net exports, taking away 0.4 percentage points.

The figures also come after recent construction and engineering figures were weaker than expected.

But CommSec economist Craig James says that while the growth was modest, growth is now in its 19th consecutive year – a point that should be praised.

“How many countries can claim to have notched up 19 consecutive years of economic growth. You’d be scratching to find any country apart from Australia in this elite club. No doubt there are challenges ahead to maintain the extraordinary run of prosperity, but clearly you would want to be in Australia’s shoes as opposed to any other advanced nation.”

“The challenge will be to expand productive capacity and take on more foreign workers to ensure that the economy doesn’t hit the wall.”

WikiLeaks founder Julian Assange has now been placed on an Interpol wanted list, suspected of rape, sexual molestation and unlawful coercion in his home country of Sweden.

The arrest comes as the site continues to release thousands of diplomatic cables that have sent shockwaves through governments worldwide, prompting the United States to begin talks with several countries in order to keep the embarrassing details of those cables under wraps.

Interpol has now issued a “Red Notice” for Assange, meaning the 39-year-old can be arrested and extradited to Sweden if authorities choose. Assange is suspected to be hiding in Britain, but has not appeared since the cables went live.

Meanwhile, the latest data from the Australian Industry Group-PricewaterhouseCoopers Performance of Manufacturing Index reveals activity softened in November due to the rising dollar and higher interest rates.

The PMI fell by 1.8 points to 47.6 points in November – well below the 50-point level separating expansion from contraction.

“A rise in new orders was largely behind the strong result in the paper, printing and publishing sub-sector,” the survey said.

“This increase, together with the positive contributions from other sub-sectors experiencing growth in the month, was not enough to lift the manufacturing sector into the black in November.”

Australian Industry Group chief executive Heather Ridout said weakness in the forward-looking new orders suggest that a pick-up in activity isn’t likely in the short-term.

“Clearly, factors including the sustained high dollar, higher interest rates and skill shortages, together with the caution around spending on the part of business and consumers, are dampening the outlook for the sector with implications for the broader economy.”

The Business Council of Australia has said the Government should start paying down its debt before any type of money is put into a long-term prosperity fund – a plan proposed by Reserve Bank governor Glenn Stevens.

“By the end of 2012 we will have nearly $100 billion in net debt,” council president Graham Bradley told ABC Radio. “We would be better to get that paid down so that we bulwark ourselves against another global downturn first.”

“If there is still surplus left over, let’s look closely at the wisdom of what Glenn Stevens is saying.”

Shares flat after weak Wall Street trading

The Australian sharemarket has opened flat this morning, following weak results from overseas as investors take a wait-and-see approach to Europe’s ongoing debt problems.

The benchmark S&P/ASX200 index was down nine points or 0.22% to 4574.5 at 12.05 AEST, while the Australian dollar also opened lower at US95c.

ANZ shares fell 0.3% to $22.60, while Commonwealth Bank shares dropped 0.6% to $47.90. NAB lost 1.4% to $23.12 as Westpac dropped 0.2% to $21.33.

As reported by the Australian Financial Review, the Federal Government is considering phasing in a tax for small miners. It is understood the legislation is being prepared for introduction into Parliament early next year.

TOG Telecom has now upgraded its full year guidance, with earnings set to range between $215-225 million.

The company previously forecasted EBITDA of $210-216 million for the year. The company also said that it expects earnings for the first half of the current financial year to increase from $77 million to $94 million.

US consumer confidence grows in November

Consumer confidence rose during November in the United States, reaching a five-month high, while Midwest business activity also grew faster than expected, according to a private index.

The Conference Board, said its index of consumer attitudes increased to 54.1 in November, the strongest reading since June, from a revised 49.9 in October.

Meanwhile, the Institute for Supply Management-Chicago’s business barometer rose to 62.5 in November, up from 60.6 in October.

“On balance this morning’s data has been positive and suggests continued stabilisation in US economic reports,” Commonwealth Foreign Exchange senior market analyst Omer Esiner told Reuters.

Meanwhile, Bank of America shares have dropped over 3% due to fears that the next WikiLeaks document release may hit the finance giant. Julian Assange, who runs the WikiLeaks site, has said he plans to release thousands of documents targeting a major US bank early next year.

On Wall Street, the Dow Jones Industrial Average fell 46.47 points or 0.42% to 11,006.2.