Business conditions slip in April as strong Aussie dollar bites: Midday Roundup

Business conditions slipped in April, after recording a solid lift in March, as profitability and trading conditions decreased, according to the National Australia Bank monthly business survey.

Conditions slipped from an index of nine points to five, while the business conditions index dropped from nine points to seven. Trading conditions dropped significantly, from an index of 15 points to just six.

In good news however, business conditions were in line with trend and remained positive despite a softening over the month.

NAB says it appeared the high Australian dollar is “beginning to erode sentiment”, with manufacturing, construction and personal and recreational services reporting falls in conditions.

And while price inflation was “fairly subdued”, labour costs increased – consistent with rising employment growth and a tightening labour market.

The bank tips gross domestic product growth of 3.75% in the June quarter, and says given more bullish commentary from the Reserve Bank last week about inflation, it has brought forward its intention rate hike forecasts to June or July, and September.

Job ads increase for 12th straight month: ANZ

In good news for job hunters, ANZ says the number of job advertisements has increased for the 12th consecutive month.

The ANZ job ads survey shows newspaper and online ads lifted 1% in April, taking the annual rise to a massive 20.5%.

“Recent trends in job advertising exhibit a distinct resources/two-speed economy nature,” ANZ head of Australian economics and property research Ivan Colhoun said.

“Advertising has slowed in NSW, Victoria, Tasmania and the ACT, and broadly strengthened in Queensland (in spite of the floods) and the NT.”

“In WA, advertising has slowed a little in recent months from very strong rates of growth in the second half of 2010 and early 2011, but remains above national average growth rates,” he said.

Official job figures will be released on Thursday. ANZ expects a 5,000 fall in employment, with the unemployment rate steady at 4.9%.

Spotless turns down private equity offer

Cleaning and maintenance group Spotless has passed on a takeover offer from an undisclosed private equity firm, according to a statement released by the company this morning.

Spotless said the deal – worth $657 million – was turned down, with the offer proposing to buy 100% of Spotless shares for $2.50 each in cash.

“The Spotless directors have reviewed the proposal in detail and believe that it does not reflect the fundamental value of the company in the context of a change of control,” the statement said.

Australian shares open higher after good US lead

The Australian sharemarket has opened higher this morning after commodity prices increased and the United States released positive jobs data late last week.

The benchmark S&P/ASX200 index was up 45 points or 0.97% to 4789 at 12.00 AEST, while the Australian dollar also increased to $US1.07.

AMP shares gained 1.13% to $5.35, while Commonwealth Bank shares gained 0.87% to $53.09. Westpac gained 1.59% to $24.30 as NAB rose 1.12% to $28.09.

In the United States, stocks rallied late last week after the Department of Labor revealed more than 240,000 jobs were added in April, above analysts’ expectations of a 185,500 rise.

However, the unemployment rate rose to 9% as more people started looking for work.

Hockey criticises budget spending

Opposition treasury spokesman Joe Hockey has attacked the Government over tomorrow night’s budget, saying all the announcements made in the past week have been about spending promises.

“This week we have seen the Government spending an enormous amount of money,” Hockey told ABC yesterday.

This morning the Government announced a new initiative for businesses to receive a $5,000 deduction on a vehicle purchase, although it scrapped the entrepreneurs’ tax offset to do so. Treasurer Wayne Swan also announced a small change in the way the low-income tax offset is calculated, meaning more workers will see an increase in week-to-week pay.

“The secret to getting back into surplus is to stop spending so much money. All it has done in the last five days is announce expenditure,” he said.