Construction industry expands in February: Economy Roundup

The Australian construction industry has managed to expand for a second month in February, but at a slower pace, according to the latest results from the Australian Industry Group-Housing Industry Association Performance of Construction Index.

The survey found the index dropped by 4.9 points to 52.8 in February, still above the 50-point level separating expansion from contraction.

The accompanying report said activity in the house building, engineering and commercial construction sectors all expanded, but at a lower rate, with AIG director of public policy Peter Burn saying the result is an improvement from last year.

“The house building sector, in particular, experienced solid conditions, in line with official data showing a continued increase in approvals for detached houses,” he said.

“The survey points to housing activity holding up over coming months with firms reporting a further improvement in their order books and the emerging signs of an increase in investor activity… The key concern is that higher interest rates and, in particular, the clear risk of further increases, will pull back growth in coming months.”

HIA economist Ben Phillips also said the detached housing sector is continuing to recover.

“The sustainability of that recovery will be tested later in 2010 as social housing and first home buyer activity declines and interest rates increase.”

Meanwhile, a new report has found production of crude oil in Australia has dropped by 17% to its lowest level in 40 years.

The EnergyQuest report shows production dropped from 120.6 million barrels to 99.5 million barrels last year. The firm’s chief executive, Graeme Bethune, said in a statement the overall trend suggests production will continue to fall.

“The recent start up of BHP Billiton’s Pyrenees oil field and Apache’s Van Gogh field – both situated off Western Australia’s north-west coast – will provide a boost in the short-term, however the long-term trend is for production to keep falling,” he said.

Shares open flat despite Wall Street lead

The Australian sharemarket has opened flat today despite some gains on Wall Street, with investors nervous about the upcoming US employment data which could paint a picture of the country’s economic recovery.

The benchmark S&P/ASX200 index was up 29 points or 0.61% to 4779.7 at 12.00 AEST, while the Australian dollar dropped slightly to US90c.

ANZ shares rose 0.5% to $23.79, while Commonwealth Bank shares gained 0.4% to $55.21. Westpac lost 0.1% to $26.90, as NAB also declined 0.2% to $26.60.

Pallet manufacturer Brambles has appointed Dolph Westerbos as its new head of CHEP business in Europe, Middle East and Africa The company said Westerbos will fill the role left open by Tom Gorman, who became the chief executive last November.

“I am delighted to add an executive of Dolph’s calibre to the Brambles ELT,” Gorman said in a statement to the ASX. “He has a strong operating background, considerable logistics and supply chain expertise and possesses a complementary skill set to the other members of the ELT.”

“In addition, Dolph’s perspectives on the deployment of emerging technologies will be invaluable to us as we look to expand our footprint and develop our services around the world.”

Brick and tile manufacturer has purchased concrete panel marker Sasso Precast Concrete for $35.25 million in order to diversify its business. Managing director Lindsay Partridge said the acquisition was attractive due to Sasso’s growth.

“These are segments of the building products market in which we don’t currently compete,” he said. “This acquisition provides Brickworks with an exciting new platform for growth in our building products division.”

Bright Food Group to expand CSR offer

The Chinese Bright Food Group will update its offer for CSR’s sugar business by the end of the year, the China Daily has reported.

“Bright Food is in touch with CSR, and it is likely that the deal could be finalised this year, as our offer is still attractive,” said Ge Junjie, deputy general manager of Bright Food Group, according to the publication.

However, GPG executive director Gary Weiss told The Australian his company, which holds a significant stake in CSR, does not want any deal to go ahead.

“My view has not changed,” Weiss said. “CSR shareholders would not be disadvantaged if CSR engaged with Bright Food… After all, CSR’s demerger path has been temporarily blocked by the court ruling.”

Meanwhile, Tower Australia has said Japanese life insurance group Dai-ichi Mutual Life has received approval to increase its interest in the company.

The Australian Prudential Regulation Authority and the Foreign Investment Review Board have given approval for a 49.9% shareholding limit, a statement to the Australian Securities Exchange claimed.

Overseas, the US stock market has gained some ground due to better-than-expected retail data and a drop in the number of Americans claiming jobless benefits, both figures suggesting the economy is heading in the right direction. The Dow Jones Industrial Average gained 47.38 points or 0.46% to 10,444.14.