Economy returning to boom-time levels, Westpac says: Economy Roundup

The Australian economy is set to continue its recovery over the next year with improvements on par with 2007 levels, according to the latest results from a private survey.

The Westpac-Melbourne Institute leading index of economic activity, which predicts the likely pace of economy activity three to nine months in the future, recorded an annualised growth rate of 6.2% in December – well above the long-term trend rate of 2.7%.

Senior economist Matthew Hassan said the rate has continued to improve despite dropping to negative 6.9% in May 2009.

“This large swing is not only the fastest reversal since the economy bounced out of recession in the mid-1970s but also puts the growth outlook back on a par with that seen in 2007 at the height of Australia’s resources boom,” he said in a statement.

“Three of the four monthly components of the index rose in December the share price Index (up by 3.6%); dwelling approvals (up by 2.2%) and US industrial production (up by 0.6%).”

Hassan added strong economic data released since the last rate increase by the Reserve Bank of Australia may cause the board to increase rates again on March 2.

“We expect the February decision to mark a short rather than extended pause. The Bank has shifted to a slower pace of tightening and is now keeping its options more open. Decisions are likely to remain ‘finely balanced’ but our central case is still for another 25 basis point rise in March.”

Meanwhile, shopping centre operator Westfield has recorded a $457.8 million loss during the 2009 financial year, up from the $2.2 billion loss it posted during 2008.

The company announced operation earnings increased by 6.2% to $2.06 billion, with that figure at $1.02 billion for the second half of 2009.

“We do have a large liquidity position that allows us to do capital investments as the company sees fit depending on returns and investments that are presented to us that includes both development opportunities as well as acquisitions,” Westfield co-managing director Peter Lowy told an analysts’ briefing.

The company also said it would begin to target long-term investment returns of between 12-15%. It will also resume a number of development projects.

AXA posts $679.2 million net profit

Meanwhile, AXA Asia Pacific Holdings has posted a net profit of $679.2 million for the 12 months to December 31, following a $278.7 million loss in the previous year.

The company announced operating earnings remained at about $554 million, while it also announced improvements were due to recoveries in equity markets.

“Notwithstanding the possible acquisition of AXA APH, management is firmly focused on continuing to drive the business forward and concentrating on maximising shareholder value,” chief executive Andrew Penn said in a statement.

“We have navigated our way through the global financial crisis successfully and 2010 is about accelerating our growth.”

Meanwhile, the Australian sharemarket has opened higher today following improvements on Wall Street, where good corporate results have bolstered investor confidence.

The benchmark S&P/ASX200 index was up 82.445 points or 1.8% to 4650.2 at 12.00 AEST, while the Australian dollar also increased slightly to US90c.

ANZ shares increased by 3.3% to $21.80, while Commonwealth Bank shares also increased 2% to $52.52. NAB rose 2.1% to $25.57, while Westpac lifted 1.8% to $25.18.

Coca-Cola Amatil has announced a 16.4% increase in full-year net profit to $449 million for the 12 months ending December 31, following a profit of $385.6 million during 2008.

The company said the result was a record, and that trading revenue also grew by 7.6% to $4.40 billion. Earnings before interest and tax rose by 10.3% to $787.3 million.

“The significant investments made by the company over the last three years in capacity, operational capability and cold drink coolers, as well as successful new product and package innovation, continues to distinguish the performance of CCA from its food and beverage peer group,” managing director Terry Davis said in a statement.

Brambles profit declines 7%

Pallet-maker Brambles has recorded a 7% decline in first half net profit to $US207.1 million for the six months ending December 31, down from $US212.8 million in the previous corresponding period. Sales revenue also fell by 2% to $US2.09 billion.

“We are well-placed to return to growth as business conditions gradually improve and initiatives put in place for the long-term show results,” chief executive Tom Gorman said in a statement.

Toll road operator ConnectEast Group has recorded a loss of $43.26 million for the first half of the financial year, with total revenue at $100.55 million. However, the company said it is recording growth in both traffic and revenue.

“ConnectEast has worked hard to both accelerate the number of trips being taken on EastLink and to establish a more robust and sustainable financial structure for the business,” managing director Dennis Cliche said in a statement.

Overseas, Wall Street stocks rallied due to good performances from companies in the manufacturing and energy sectors. The Dow Jones Industrial Average gained 169.67 points or 1.68% to 10,268.81.