Retail sales up by 0.6% in April: Economy Roundup

Retail turnover increased by a higher-than-expected 0.6% in April to $20.1 billion, according to the latest figures from the Australian Bureau of Statistics.

The ABS found food retailing increased by 0.2%, while cafes, restaurants and takeaway food services recorded an increase of 0.2% and the “other retailing” category increased by 0.3%,

Additionally, household good retailing remained flat, department store turnover decreased by 0.3%, while clothing, footwear and personal accessory retailing fell by 0.2%.

South Australian and the Northern Territory recorded increases of 0.7% each, with Victorian trade rising by 0.4% and the ACT recording a 0.3% increase. Western Australia and Queensland recorded increases of 0.2% and 0.1% respectively, while Tasmania remained flat and NSW recorded a 0.3% decrease.

Meanwhile, the ABS also reported building approvals fell by an unexpected rate of 14.8%, seasonally adjusted, to a total of 14,144 from 16,383 in March.

Private sector approvals fell by 13.5% to 8,404, while approvals for “other dwellings” dropped by 5.4% to 4,523.

The data comes as the Reserve Bank of Australia meets this afternoon to determine whether another rate rise is appropriate. Analysts believe the RBA will keep rates steady.

But while building approvals may have fallen, manufacturing activity remains strong with the Australian Industry Group-PricewaterhouseCoopers performance of manufacturing index dropping 3.5 points to 56.3, still above the 50-point level separating expansion from contraction.

The outlook for jobs index rose 0.4 points to 55.6, with growth in manufacturing employment and wages recorded during the month.

“The continuing growth in manufacturing in May is a welcome sign of a recovery that has achieved some traction,” AIG chief executive Heather Ridout said in a statement.

“Unfortunately, the patchiness of the past several months also continues and there are worrying signs of weakness among the consumer-related sub-sectors of the industry.

“The sluggishness among the consumer-related sub-sectors reflects the cumulative impact of six rate rises out of seven RBA meetings and, to a lesser extent, an erosion of confidence against the background of falling global stock markets and high public debt levels in a number of European countries.”

Shares flat with Wall Street on public holiday

The Australian sharemarket has opened lower today, with no leads from Wall Street or British markets due to public holidays in both countries.

The benchmark S&P/ASX200 index was down 42 points or 0.96% to 4387.3 at 12.00 AEST, while the Australian dollar also fell slightly to US84c.

Commonwealth Bank shares dropped 0.7% to $51.00, while NAB shares also fell 1.2% to $24.33. ANZ lost 0.4% to $22.21, as Westpac lost 1.9% to $22.51.

NAB has secured an extension on its agreement with takeover target AXA Asia Pacific and French parent group AXA SA to enable the lender to address competition concerns.

The agreement has been extended to July 15 in order to satisfy concerns raised by the Australian Competition and Consumer Commission.

NAB would not discuss its plans and only said it “continues to pursue its options in relation to the ACCC objections to the proposal”.

Meanwhile, grocery wholesaler Metcash has recorded a jump in full-year profit to $227.6 million, and says growth in the food and liquor sector will continue throughout the rest of the year.

The company posted a 12.4% increase in profit after tax to $227.6 million for the year to April 30, up from the $202.5 million recorded in the previous financial year.

“We are pleased with the result, as we continue to operate in a low inflation environment, the positive effects of last year’s government stimulus package have receded and interest rate increases have impacted on household budgets,” Metcash chief executive Andrew Reitzer said in a statement.

“While current trading conditions remain subdued, we are confident of further growth in our earnings per share in the 2011 financial year, subject to economic conditions remaining stable.”

In Canberra, the Government’s paid parental leave system is tipped to pass the House of Representatives today, with the legislation to provide 18 weeks’ leave for either parent to be funded by the Government at minimum wage rates of $543 per week.

Families Minister Jenny Macklin told AAP the legislation was a “landmark economic and social reform for Australian families and for Australian businesses”.

“It’s practical, fully costed and will be fully funded out of consolidated revenue, not by imposing a new tax on Australian business like the new tax proposed by the opposition,” she said.

Flight Centre confirms profit guidance

Flight Centre has confirmed its profit guidance for the 2010 financial year, with the company saying the European ash cloud will have no impact on results.

The company still expects full-year pre-tax profit of between $190-200 million, excluding any major non-recurring items.

Federal treasurer Wayne Swan has defended the Government’s use of $38 million for an advertising campaign promoting the introduction of the resources super profits tax.

The Opposition has criticised the Government for changing regulations in order to embark on the advertising campaign.

“There’s plenty of precedent for that in our history and that is the responsible thing to do,” he told ABC Radio. “All that has occurred here is that that campaign has been brought forward as a consequence of a massive misinformation campaign which has been put forward by the mining industry.”