Imports increase 1% in December, More strikes in WA: Economy Roundup

The value of merchandise imports during December increased by 1% to $17.6 billion, according to the latest figures from the Australian Bureau of Statistics.

The ABS’s preliminary analysis reveals debits on a balance of payments basis lifted by 7% to $1.1 billion in seasonally adjusted terms. Intermediate and other merchandise goods lifted 11% or $760 million, with the fuels and lubricants component up by a massive 26%.

Capital goods rose by 7%, or $246 million, while non-monetary gold rose by 51% or $224 million. Consumption goods dropped 1%, or $74 million.

The Australian sharemarket has opened flat today after positive results in Europe, but no lead from the US after Wall Street was closed for Martin Luther King day.

The benchmark S&P/ASX200 index was down 34 points or 0.7% to 4876.5 at 12.10 AEST, while the Australian dollar also rose slightly to US92.7c.

Commonwealth Bank shares lost 1.7% to $57.04, with ANZ shares also losing 0.8% to $22.99. NAB lost 0.7% to $27.30, while Westpac fell 1.4% to $25.64.

Share registry company Computershare has announced expectations of a 20% increase in earnings per share in the first half of the financial year, ending December 31.

“While the results for the first half are encouraging, a number of significant transactions took place over the period that may not repeat in the second half,” the company said in a statement.

The company said it will review its forecast before the release of its results, which is set to occur on 10 February.

Strike at Xstrata mine in WA

The world’s largest producer of thermal coal, Xstrata, has said a strike at the Bulga mining complex in eastern Australia has interrupted operations and will continue for another 24 hours.

“The union could plan more strike action if the wage dispute is not resolved. We are constantly assessing its impact on production,” Xstrata’s spokesman James Rickards said in a statement. “Coal shipments are not affected by the strike yet,” he said.

Workers are demanding higher wages, and have rejected the company’s offer of a 15% increase over three years.

“The CFMEU’s decision to disrupt production is not in the interest of our employees or the future of the Bulga operation,” Xstrata Coal general manager eastern operations Greg Pawley said in a statement.

“The CFMEU is demanding changes to the proposed EA which would ultimately impose restrictive practices on the business to the long-term detriment of the Bulga complex and the working conditions and benefits of our employees.”

The potential $1.5 billion takeover bid from Bright Food Group for CSR’s sugar business may evaporate with the Chinese company reportedly losing interest.

As reported in the Australian Financial Review, BFG may abandon the deal if CSR does not agree to talk. CSR said at a recent meeting it would consider the proposal, but also said it was not at a level worthy of acceptance and “merely an expression of interest”.

Lihir Gold chief executive Arthur Hood has left his role with a $15 million payment, ending his contract nine months earlier than expected. He will receive a payment of $2.3 million, a $1.3 million cash payment and $3.5 million in shares.

These shares are currently worth about $11.5 million.

British fibre optics group claims cheaper NBN construction possible

A British fibre-optic company has claimed it can build the National Broadband Network for cheaper than the $43 billion price tag, and without Telstra’s involvement.

Chief executive of i3 Group, which owns deployment company H20, told The Australian the company could use sewers, storm water systems and trenching using cheaper methods.

“It’s this combination of deployment techniques that allows us to be very competitive,” Thomas said.

Overseas, Kraft and Cadbury are close to a potential deal after allegedly holdings talks to create the world’s largest confectionary group.

As reported by Reuters, while Cadbury previously rejected an $18.5 billion takeover offer, Kraft is now facing a looming Tuesday evening deadline to raise its bid. But one source says the two companies have nearly struck a deal.

“Both parties felt that they were potentially able to realise their most important needs,” the source claimed. However, both companies have denied comment.

Elsewhere, the International Monetary Fund has warned countries may enter recession if they remove strategies used to combat the financial crisis.

Head of the fund, Dominique Strauss-Kahn, said in a statement that recoveries are dependent on policies which stimulate domestic economies.

“Recovery in advanced economies has been sluggish,” he said. “We have to be cautious because the recovery has been fragile.”

“The best indicator (for the exit timing) is private demand and employment… In most countries, growth is still supported by government policies. For as long as you do not have private demand strong enough to offset the need of public policy, you shouldn’t exit.”