Services sector contracts in July: Midday roundup

Activity in the services sector contracted during July, according to the latest results from the Australian Industry Group-Commonwealth Bank Australian Performance of Services Index.

The index itself fell 2.3 points to 46.5 points, below the 50-point level separating expansion from contraction.

Respondents to the survey said weak manufacturing activity and the higher Australian dollar are hurting the industry.

Only three of the nine sub-sectors recorded increases – health and community services, finance and insurance, along with cafes and restaurants.

“The latest services sector snapshot mirrors the multi-speed growth rates being posted across industries and regions around the nation at present as the economy undergoes significant structural adjustment due to the high Australian dollar,” Commonwealth Bank senior economist John Peters said in a statement.

“On a brighter note, the lagged impact of the aggregate 1.25% cut in interest rates by the Reserve Bank since October 2011 has yet to fully impact the economy and should, ultimately, give some boost to most sectors in late 2012.”

BHP confirms asset writedowns

Mining giant BHP has blamed lower gas prices in the United States for an impairment charge on the value of its shale and nickel assets in Australia.

In a statement to the Australian Stock Exchange, BHP said it had taken an impairment charge before tax of $US2.84 billion.

“The development of these assets is expected to create substantial, long term shareholder value,” the company said.

“While we have responded appropriately to the changed market conditions today’s impairment is clearly disappointing,” added chief executive Marius Kloppers.

Shares down on weak offshore leads

The Australian sharemarket has opened lower this morning after weak leads from offshore markets, especially after the European Central Bank failed to outline more measures to attack the region’s debt crisis.

The benchmark S&P/ASX200 index was down 36 points or 0.9% to 4232.9 at 11.50 AEST, while the Australian dollar rose slightly to $US1.04.

In the United States, the Dow Jones Industrial Average fell 92 points or 0.7% to 12,878.2.

Palmer unveils plans for casino complex

Billionaire Clive Palmer has unveiled plans for a multi-billion dollar casino complex at his Coolum Resort on the Sunshine Coast.

The plans include an international airport, convention centre, amusement park and hotel with more than a thousand rooms.

The hotel changed ownership hands earlier this yeServices sector contracts in July: Midday roundup