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Australian business picture mixed
SYDNEY, Australia (CNN) -- Two business surveys paint a mixed picture of the Australian economy, with one seeing signs of caution and the other finding "robust" conditions. The Dun and Bradstreet business expectations survey released Tuesday found executives are starting to apply the brakes on investment plans. It said that question marks continue to hang over the global economy, the Australian housing construction market and a final end to the drought that gripped much of Australia in 2001-02. D&B Australia CEO Christine Christian said the latest survey reflects "an air of caution" creeping into the business outlook for late 2003. But according to Australia's biggest bank, the National Australia Bank, its June monthly survey suggests the economy remains robust. The survey, also released Tuesday, found "ongoing strength" in the non-farm economy, leading to what it said was the remarkable achievement of 4.0 to 4.25 percent non-farm growth in the first half of 2003. NAB chief economist Alan Oster said despite the robust result in the June survey, the impact of the drought and ongoing weakness in global conditions meant the bank was sticking with its 2003 forecast of 2.75 percent GDP growth overall. Australia's economy, which grew at a rate of 4 percent for most of last year, has slowed in 2003, with most forecasts now around 3 percent. Last week, the central Reserve Bank of Australia (RBA) left its benchmark interest rate unchanged at 4.75 percent. Rates have now been stable for a year. NAB's Oster said the bank still expected the RBA to cut interest rates by around half a percentage point in coming months. Oster said that view depended heavily on global uncertainties and the NAB's expectation the Australian dollar would continue to strengthen. The Australian currency, which has been trading recently at five-year highs of 68 U.S. cents, will likely hit 71-72 U.S. cents by the end of the year, Oster said. Last month, RBA governor Ian Macfarlane hinted at a rate cut if the global outlook deteriorated further. But he had to set that against the expectation that any cut would further heat the Australian housing market. Macfarlane has been concerned about the sustained housing boom in Australia and its impact on household debt, warning that debt levels were "excessive." The Australia dollar has eased in Tuesday trade, down to 67.63 U.S. cents at midday. On the equities front, the sharemarket is up about 0.2 percent.
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