GDP up 1.2% in June quarter: Midday Roundup

The economy grew by a slightly higher than expected 1.2% in the June quarter after falling in the March quarter, mostly due to effects from natural disasters.

The Australian Bureau of Statistics data showed the terms of trade rose by 5.4%, while real gross domestic income rose by 2.6%. In seasonally adjusted terms, manufacturing was up 2.8% and transport, postal and warehousing was up 4.4%, each contributing 0.2 percentage points to GDP.

Economists had been expecting GDP to rise by 1.1% in the June quarter.

Shares higher despite weak Wall Street

The Australian sharemarket has opened higher this morning despite coming off a weak lead in the United States after the Labor Day weekend.

The benchmark S&P/ASX200 index was up 71 points or 1.76% to 4147 at 12.15 AEST, while the Australian dollar rose to $US1.05c after the GDP figures were announced.

AMP shares rose 2.23% to $4.13, while Commonwealth Bank shares rose 2.28% to $47.03. Westpac rose 2.67% to $20.02, as ANZ rose 2.01% to $19.82.

In the US, the Dow Jones Industrial Average fell 100 points or 0.9% to 11,139.

Stevens says “unusual, powerful set of complex forces” hitting economy

Reserve Bank of Australia Governor Glenn Stevens says current economic conditions are the most puzzling he has seen.

“More than at most times in my professional life, Australia’s economy faces a very unusual, and powerful, set of complex forces,” Stevens said in a speech in Perth today.

“Economic growth has been uneven and patchy, and financial concerns keep recurring, with waves of positive and negative sentiment sweeping global markets.”

“Australians feel the effects of those swings in sentiment.”

The RBA yesterday kept rates on hold at 4.75%, as expected.

“Looking ahead, the task for the board is to assess what bearing recent information, and recent international and local events, will have on the medium-term outlook for demand and inflation,” he said.

Construction activity falls during August

Construction activity fell to nearly a two and a half year low during August, according to the latest figures from the Australian Industry Group and the Housing Industry Association.

The two firms’ performance of construction index fell four points to 32, well below the 50-point level separating expansion from contraction.

“The prolonged downturn in the construction sector is detracting from current levels of activity across the broader economy through its impacts on manufacturing and service related industries linked to the sector,” Peter Burn from AIG said in a statement.

“Construction employment has also been falling for some time and this too is being felt across the broader economy, as households reliant on wages from this important sector cut back on their spending.”

The HIA has continually lobbied Federal and State governments for housing and construction stimulus.

Yahoo chief Carol Bartz fired

Search giant Yahoo has fired chief executive Carol Bartz, with chief financial officer, Tim Morse named as her replacement on an interim basis. Yahoo shares have risen over 6% after the announcement.

According to the Wall Street Journal, Bartz sent an email to staff explaining that she had been fired.

“To all, I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s Chairman of the Board. It has been my pleasure to work with all of you and I wish you only the best going forward. Carol,” the email reportedly states.

Bartz’ tenure at Yahoo has been embroiled in controversy, with many shareholders vocally expressing their disappointment in her leadership.

Chairman Roy Bostock said in a statement that he is dedicated to putting Yahoo “on a trajectory for growth and innovation and deliver value to shareholders”.

“On behalf of the entire board, I want to thank Carol for her service to Yahoo during a critical time of transition in the company’s history, and against a very challenging macro-economic backdrop.”

Bartz was hired in 2009 to replace Jerry Yang, in the hopes of realigning the company’s priorities. However, its financial results have not impressed many shareholders or analysts.

Macquarie flags lower first-half result, but reaffirms full-year forecast

Meanwhile, investment bank Macquarie Group has flagged a lowered first-half result, but reiterated its expectation for an improvement in the full year, provided market conditions did not deteriorate at a greater level than last year.

“It is expected that 1H12 result will be lower than 1H11,” Macquarie told the market this morning.

“However, it should be noted that market conditions are particularly uncertain at the current time,” it said.