Housing finance weaker than expected, 1000 jobs slashed: Economy roundup

The property sector continues to struggle with the downturn, despite the Government’s stimulatory efforts, with the number of home loans increasing by a seasonally adjusted 0.4% in February, well below economists’ expectations of a 2% rise.

The new ABS figures also show that the total value of loans for occupied homes rose 2.7% in February, while investment loans dropped by 2.8%.

But the Government’s increased first home owner grant has proven to be effective, with the number of commitments of first home buyers as a proportion of the market increasing to 26.9% from 26.5% in January – the highest proportion since 1991.

Job cuts

There was more bad news for the wider economy, with over 1000 workers sacked yesterday across a number of industries.

Construction and mining equipment manufacturer Caterpillar is set to slash 280 jobs from its Tasmanian operations, while mineral sands miner Iluka Resources announced yesterday that 135 jobs will be scrapped.

About 705 permanent employees and contractors at Rio Tinto’s Queensland mines have been sacked, while professional services company KPMG has slashed 99 staff from its payroll just two months after the retrenchment of 101 employees.

Chief executive Geoff Wilson has said in an internal mail to staff that the redundancies will affect most locations.

“While I am unable to make the guarantee that we don’t need to make further difficult decisions as events continue to unfold, I would to like to reassure that the overall health of our business is very sound,” he said.

Shares down

The Australian sharemarket has opened lower today after negative leads from Wall Street overnight, sparked by fears of pessimistic first quarter results.

The benchmark S&P/ASX200 index was down 55.3 points or 1.49% to 3651 at 11.58 AEST. The Australian dollar also dropped to US70 cents.

NAB shares dropped 3.6% to $22.22, while Wesfarmers dropped 2% to $18.86. ANZ fell 2.6% to $16.55 as Woolworths fell 0.5% to $25.45.

Overseas, Wall Street dropped on negative expectations for first quarter results, after aluminium producer Alcoa posted a $US497 million first quarter loss.

The Dow Jones Industrial Average dropped 186.29 points or 2.34% to 7789.56.

Toll road company BrisConnections shares remain suspended from trading, pending an announcement on the company’s future.

“BrisConnections advises that it is awaiting further information from Macquarie Capital Advisers Limited and Deutsche Bank regarding any agreement on the terms of the proposal referred to in the request for trading halt,” the company said in a statement to the ASX.

“There is no assurance that an agreement or a satisfactory proposal will emerge.”

Meanwhile, the Federal Government has signalled the potential separation of Telstra’s wholesale and retail operations as part of a telecommunications regulation shake-up.

The Government has released a regulatory reform discussion paper, just hours after it announced its intentions to create a company to build the national broadband network.

Communications Minister Stephen Conroy has said that a competitive telecommunications sector is important for providing lower prices and better quality services.

The paper discusses a range of other options, including expanding the ACCC’s regulator processes and introducing more effective rules for ensuring connections and repairs are made within set timeframes.