Construction activity contracts during June, Shares move lower: Economy Roundup

Activity in the construction industry fell during June for the first time in four months, due a decline in housing construction and new orders, the results of a new survey reveals.

The Australia Industry Group-Housing Industry Association survey reveals activity has fallen due to uncertainty regarding credit conditions and overall economic behaviour.

The construction index dropped 6.8 points to a 10-month low of 46.4, well under the 50-point level separating expansion from contraction.

“The sharp fall in recorded activity in the house building sub-sector comes after almost a year of expansion,” AIG associate director of public policy Peter Burn said in a statement.

“With employment and new orders falling in other sub-sectors, June marked a turn for the worse for the construction sector as a whole.”

The survey of new orders dropped seven points to 45.7, while the employment index fell 12.2 points to 44.1.

The measure of engineering climbed 10.4 points to 52.9, with the index for commercial building also rising 1.3 points to 51.8.

As reported by Reuters, Sigma Pharmaceuticals is considering a revised takeover offer from South African group Aspen Pharmacare Holdings.

The company said in a statement to the ASX that it has recommended shareholders don’t take any action on the $648 million offer. Another announcement is expected soon.

Meanwhile, National Australia Bank chief executive Cameron Clyne has said the next few years will be difficult for banks, especially due to the current debt problems in Europe.

“It’s going to be a rocky 12 months,” he apparently told the American Chamber of Commerce lunch in Adelaide. “But if you get through that with a stabilising view, that sets us up for the next five years.”

Additionally, he noted a number of recommendations in the Cooper Review, saying that “we would support anything that promotes trust and transparency in our industry.”

Share market opens lower despite Wall Street lead

The Australian sharemarket has opened lower today despite weak leads from Wall Street overnight, where investors returned after a three-day weekend.

The benchmark S&P/ASX200 index was down 25 points or 0.61% to 4250.1 at 12.10 AEST, while the Australian dollar rose slightly to US84c.

Commonwealth Bank shares have fallen 1.2% to $48.31 this morning, while NAB shares have dropped 1% to $23.17. AMP lost 1.9% to $5.10 as Westpac dropped 1% to $21.19.

Woodside Petroleum is reportedly holding talks with renewable energy group Tidal Power, according to the AFR, regarding the use of its technology in the James Point LNG project.

It is understood the talks are not “negotiations”, but apparently Tidal Energy has sought environmental approval from the Federal Government already.

In a note to shareholders, BHP Billiton chairman Jac Nasser has said the new mining tax is closer to the reform proposed by the government and should encourage industry investment.

“A good foundation has now been established on which an effective tax can be implemented,” Nasser said in a letter. “There is still a great deal of detailed work to be done before this tax is enacted and its impact is certain.

“We will work with the government to ensure that the final outcome of the minerals taxation proposal maintains the international competitiveness of the Australian resources industry and is in the long term interests of all Australians,” he said.

Xtrata puts projects back on the table

Meanwhile, mining giant Xstrata has said it will put $186 million worth of projects previously shelved into action, now a deal has been reached on the Government’s mining tax.

“Today’s decision effectively lifts the suspension on expenditure announced by Xstrata last month and allows the next stage of planning for this internationally significant Wandoan project to proceed,” Xstrata Coal chief Peter Freyberg said earlier this week.

Overseas, US stocks have risen following the release of data showing the services sector expanded during June for a sixth consecutive month. The Institute for Supply Management said the services index dropped to 53.8 points from 55.4 in May.

In New York, the Dow Jones Industrial Average gained 57.14 points or 0.59% to 9,743.62.