Nathan Rees set to face leadership challenge, retail sales up 0.3%: Economy roundup

New South Wales premier Nathan Rees has said he may not hold his position by the end of the day, but intends to improve his performance despite the challenge.

He said at a press conference that this ability to act as premier has been “impaired at every turn” by “a malignant and disloyal group”.

“Should I not be premier by the end of this day, let there be no doubt in the community’s mind that any challenger will be a puppet to Eddie Obeid and Joe Tripodi,” he said. “That is the reality, that is the choice for the state today…The decision now lies in the hands of my caucus colleagues.”

But opposition leader Barry O’Farrell said the “malignant forces” to whom Rees refers are those within the party who helped him gain leadership.

“He describes any challenger as a puppet of Joe Tripodi and Eddie Obeid, and yet 15 months ago Eddie Obeid and Joe Tripodi delivered the premiership to Nathan Rees by taking out Morris Iemma,” he told Fairfax. 

Retail sales rose by a seasonally adjusted 0.3% during October after a 0.2% fall during September, according to the latest figures from the Australian Bureau of Statistics.

In original terms, turnover increased by 6.6%. In trend terms, food retailing increased by 0.2%, department stores by 0.3% while cafes, restaurants and takeaway food services grew by 1.1%. Clothing, footwear and personal accessory retailing fell by 0.1%, “other retailing” by 0.1% and household good retailing remained steady. 

In trend terms, NSW trade increased by 0.5%, VIC by 0.2%, WA by 0.3%, TAS by 0.5%, NT by 0.6% and the ACT by 0.1%. QLD trade decreased by 0.1%, while SA remained steady.

Business confidence returning, Sensis report shows

Business confidence is returning to pre-financial crisis levels, according to the latest results of the Sensis Business Index.

The quarterly survey, which used a sample of 1800 responses from SMEs, found business confidence increased during the most recent quarter to 20 November to reach its highest level since August 2007.

The building and construction, communication, property and business services, transport and storage sectors are all positive about prospects for the next year, with confidence still low in the manufacturing sector. But perceptions of the economy have improved.

“In the early phase of the economic recovery, we saw business optimism streak ahead, while trading conditions remained at historically low levels,” author Christina Singh said in a statement. “This quarter we have seen business’ perceptions and their actual performance moving more in sync.”

Profitability improved to its highest level since February 2008, while Singh said there had been a strong increase in employment. But while conditions are improving, Singh warned that businesses are not expecting a particularly strong result for the coming quarter.

“Small businesses overall are expecting demand and profits to be down on the previous quarter, but remain well above the low levels experienced during the economic downturn…Over the next 12 months, small businesses are expecting the economy to be slightly weaker, and to reduce their capital expenditure and workforce size.”

Meanwhile, a private gauge of services sector activity has found the industry recorded expansion for a second consecutive month with employment growing for the first time in 17 months.

The Australian Industry Group-Commonwealth Bank performance of services index fell 2.3 points in November, but still remained above the 50-point level separating expansion from contraction at 52.5 points.

“While it’s encouraging to see the Australian PSI remaining in the black in November, slower increases in sales and new orders confirm a hesitant recovery from the bottom of the trough earlier this year,” AIG chief executive Heather Ridout said in a statement. 

“Modest growth in consumer incomes and the fading of policy stimulus are the likely reasons for the tentative nature of improvement in the sector.”

Shares open higher despite Wall Street fall

The Australian share market has opened slightly higher today despite Wall Street stocks falling due to concerns regarding bank profits and falls in energy shares.

The benchmark S&P/ASX200 index was up 15 points or 0.33% to 4778 at 12:10 AEST, while the Australian dollar opened to lower to US92c.

Commonwealth Bank shares increased by 0.2% to $54.79, while ANZ also increased by 0.5% to $22.23. Westpac rose 0.9% to $24.48, while NAB lost 0.2% to $28.74.

Farm chemicals company Nufarm has said it expects operating profit to grow during the 2010 financial year after last year’s “poor quality performance”, the company announced.

Chairman Kerry Hoggard said at the annual general meeting that raw materials are being purchased at competitive prices and that margins are expected to recover soon.

“As a result of this product margin mix, our profit in the first half of this year will be significantly down on the previous year, however, in line with our internal projections,” he said. 

Bendigo and Adelaide Bank executive resigns

Bendigo and Adelaide Bank deputy chairman Kevin Osborn has left the company, saying he has resigned from the board to focus on other responsibilities.

Osborn was appointed to the board in 2007, but is also a director of ABB Gran, the Economic Development Board of South Australia and was formerly the chief executive of Bank One –now known as JPMorgan Chase.

“We thank him for his efforts with Bendigo and Adelaide Bank – and prior to that with Adelaide Bank – and wish him well for the future,” chairman Robert Johanson said.

In the US, hopes of a recovery have been encouraged by the recent Federal Reserve report, which stated the economy is improving with low pressure on wages. Eight of the Fed’s 12 districts reported increases in economic activity, while the remaining four reported conditions as unchanged or mixed.

On Wall Street, investors were encouraged by a private report showing the number of jobs lost during November was lower than that in October, but stocks still dropped due to pressure on energy prices.  The Dow Jones Industrial Average fell 18.90 points or 0.18% to 10,452.68.