Construction sector contracts, Shares lose ground: Economy Roundup

The Australian construction industry contracted in June due to weakness in apartment building and engineering, according to a new survey.

The Australia Industry Group / Housing Industry Association survey showed the main measure of activity dropped 4.3 points to 42.6, below the 50-point threshold separating growth and contraction.

The measure for apartment building activity dropped 13.1 points to 35.3, while engineering activity fell 9.6 points to 41.1. Housing dropped just 1.3 points to 44.

“Although the decline was principally led by the volatile apartment sector in the wake of the recent slump experienced in approvals, the survey also signalled a fall-off in work generated from both engineering and commercial construction projects,” Ai Group’s director of economics, Tony Pensabene, said in a statement.

“Firms linked the persistent weakness in industry conditions to the deteriorating economy and low business confidence which had led to continuing delays in tenders and cutbacks on new construction projects,” the index’s report said.

ASX listed companies raised $90 billion in capital during 2008-09 year

Meanwhile, companies listed on the Australian sharemarket managed to raise $90 billion in capital during the 2008-09 year, despite suffering through the global financial crisis.

The ASX said in its June 2009 activity report released yesterday that the figure goes far above the $77.9 billion recorded in the 2007-08 year.

It also said while the Australian stock market gained 7.9% over the first half of 2009, it is still down 26% over the full financial year.

Today, the Australian share market has opened lower today despite slightly positive leads from Wall Street. The benchmark S&P/ASX200 index was down 20.3 points or 0.54% to 3763.4 at 11.45 AEST. The Australian dollar also gained to US79c.

Commonwealth Bank lost 0.2% to $36.99, with AMP also losing 1.5% to $4.68. Westpac gained 1.1% to $19.29 while ANZ lost 0.1% to $15.96.

Shares in ABB Grain, the country’s largest grain and malt producer, dropped 3% after it cut earnings expectations for the current financial year by up to 32% due to lower demand. The company’s shares dropped 2.99% to $9.07.

“ABB’s revised 2009 earnings guidance is underlying NPAT of $43 million to $53 million; underlying EBITDA of $125 million to $145 million; and net one-off expenses of approximately $8 million after tax. One-off items principally represent due diligence and transaction related costs,” ABB said in a statement to the ASX.

ABB’s shares dropped 2.99 per cent to $9.07 at 1132 AEST.

Overseas, Wall Street has recorded gains due to a flock of investors moving to stronger performing stocks such as healthcare company Merck & Co. and Kraft Foods. The Dow Jones Industrial Average gained 44.13 points or 0.53% to 8324.87.

World Bank president Robert Zoellick warns we’re not out of the financial woods just yet

World leaders attending the G8 conference have agreed to fight against trade protectionism and boost agricultural investment in development countries, according to a draft paper obtained by Reuters.

The summit, which will take place from Wednesday to Friday this week, will focus on talks about food security, climate change, trade and the health of the world economy.

“The tendency of decreasing ODA (official development assistance) and national financing to agriculture must be reversed,” the draft said. “We will aim at substantially increasing aid to agriculture and food security, including through multi-year resource commitments.”

But the G8 have been warned by World Bank president Robert Zoellick, who has said in a letter to Italian Prime Minister Silvio Berlusconi that the global leaders should not assume economic recovery is near.

“As yet, 2009 remains a dangerous year. Recent gains could be reversed easily, and the pace of recovery in 2010 is far from certain,” Zoellick wrote.

“I recognise that some developed countries are now considering a policy mix that assumes the recovery is at hand. But for the developing world, it is far too early to think of such measures.”