Building approvals rise, Service sector shows signs of hope: Economy roundup

The impact of the first home owner grant continues to be felt in the property sector, with building approvals rising during March by a seasonally adjusted 3.5%, the second consecutive monthly rise.

The number of private housing approvals rose by a seasonally adjusted 2.8% to record the fourth consecutive month, while other private sector dwelling approvals rose 2.8%.

The seasonally adjusted estimate for the total value of building approvals dropped 3.5%, following a 14% increase in February. The estimate for the value of new residential homes rose 1.1%, while the seasonally adjusted value of non-residential properties fell 9.8%.

Meanwhile, activity in the Australian services sector contracted once again in April, but due to higher sales and employment levels the pace of decline has slowed, new survey results show.

The Australian Industry Group’s Performance of Services Index rose 4.3 points to 39.8 in April, still below the 50-point level separating growth from contraction.

The index of new orders jumped 6.2 points to 37.6, while the measure of sales gained 5.1 points to 39.9. The index that measures the employment outlook jumped 4.5 points to 41.7.

“The readings provide some glimmers of hope with the pace of decline easing and new orders in particular showing some upside,” Australian Industry Group chief executive Heather Ridout said. “However, business conditions remain fundamentally weak across the sector.”

Shares flat

The Australian sharemarket has opened 1.4% higher today after positive leads from Wall Street overnight, but has fallen back to erase any early gains.

The benchmark S&P/ASX200 index was up 7.7 points or 0.2% to 3890.7 at 12.15 AEST.

The Australian dollar also enjoyed early gains, reaching a seven-month high of US74 cents.       

ANZ shares gained 1% to $16.79 as Westpac gained 0.7% to $19.63. Wesfarmers shares declined 2.7% to $23.11 while AMP lifted 1.3% to $5.42.

OZ Minerals chief executive Andrew Michelmore will leave his position in the company to become a Minmetals executive once the $1.2 billion deal between the two companies is approved.

“A search and selection process for a managing director to replace Andrew Michelmore has been initiated in anticipation of the Minmetals sale process being completed,” OZ Minerals said in a statement to the ASX.

In the United States, Wall Street has posted gains on the back of optimism for the future of troubled banks. The Dow Jones Industrial Average jumped 214.33 points or 2.61% to 8426.74 at 11.49 AEST.

The country’s largest lenders also made cases to regulators that they can continue to survive the recession. The banks are currently undergoing “stress tests” to determine which banks, if any, require more capital.

The final results of the stress tests will be released on Thursday.

Meanwhile, President Barack Obama said he will introduce new tax policies that will crack down on businesses avoiding taxation on offshore profits.

“The steps I am announcing today will help us deal with some of the more egregious examples of what is wrong with our tax code,” Obama said at a press conference with Treasury Secretary Timothy Geithner.

“It is the down payment on the larger tax reform we need to make our tax system simpler and fairer and more efficient for individuals and corporations.”

The plan is estimated to save $US210 billion over the next decade, the White House says.