Construction work continues to fall in November, RBA to quiz NAB over technical glitch: Economy Roundup

Activity in the construction sector contracted for a sixth consecutive month during November, according to the latest Australian Industry Group-Housing Industry Association construction index.

The index fell by 1.8 points to 42.2, well below the 50 point level separating expansion from contraction. Apartments were the worst hit, the survey shows, reporting the worst conditions in 16 months.

“Weakness continues across the construction sector but is particularly evident in the residential housing and apartment sub-sectors,” AIG director of public policy Peter Burn said in a statement. “Expectations of further interest rate rises are having a significant impact on the sector.”

The measure of apartment building fell by 11.1 points to 32.9, with house building also dropping 9.9 to 38. Commercial building fell by 8.4 points to 38 as engineering was the only sector to gain, with a 1.9 rose to 39.4.

Meanwhile, the Business Spectator Accenture Pulse survey of chief executives reveals CEOs are optimistic about the future of their companies, with those running firms with a market capitalisation over $100 million tipping 2011 to be a good year.

More than 80% of chief executives say they are optimistic about the prospects for their business over the next 12 months, with 46% also saying they expect the Australian economy to grow healthily over the next 12 months.

As reported by Fairfax, the Reserve Bank of Australia is set to query the National Australia Bank over the technical glitch that occurred late last month which caused millions to go without pay for a weekend.

Some problems are still ongoing after further glitches caused multiple transactions to appear on users’ accounts. NAB says it is finalising all accounts and that compensation will be given to those who need it.

The report states that the Australian Prudential Regulation Authority is investigating the matter. Over 6,200 customers have applied for compensation and over 60,000 transactions are still missing, the report states.

Prime Minister Julia Gillard has said she will push on with a plan for the Murray-Darling basin despite the resignation of authority chief Michael Taylor.

“A successful plan would require both the commonwealth and states to work together,” he said in his letter of resignation to water minister Tony Burke. In Canberra, Gillard said that “we’ve got one chance to get water reform right”.

Shares higher despite flat Wall Street lead

The Australian sharemarket has opened higher this morning, despite receiving a flat lead from Wall Street where investors remain pessimistic due to ongoing debt troubles in Europe.

The benchmark S&P/ASX200 index was up 26 points or 0.56% to 4715.1 at 12.20 AEST, while the Australian dollar remained high at US99c.

AMP shares gained 0.6% to $5.16, while ANZ shares rose 0.2% to $23.31. NAB shares gained 0.6% to $23.86 as Westpac rose 0.6% to $21.81.

Property group Stockland has acquired a 1,121 hectare development site in Melbourne for an undisclosed sum.

The project will be used to build over 11,000 residential lots, with a city centre designed to provide various facilities. The properties will be brought to market over the next 30 years, the company said.

“The private vendor has agreed to a highly capital efficient structure based upon a 31 year call option structure which allows Stockland to acquire the property in a number of staged parcels on largely deferred payment terms,” Stockland said in a statement.

Australia is set to record a record wheat crop of 26.8 million tonnes during the current financial year, but the Australian Bureau of Agricultural and Resource Economics and Sciences said the harvest has been damaged by rains.

“Although above-average rainfall was welcome in early spring, recent heavy rainfall has caused harvest delays and has reduced the quality of winter crops that were due to be harvested,” the bureau said.

“In regions that have recently received heavy rainfall, the chance of achieving prime milling grades of wheat has been reduced for crops yet to be harvested.”

Debt problems plague Hungary

Moody’s has downgraded Hungary’s credit rating to just above a “junk” grading and says it will do so again if the country’s finances are not brought back up to scratch.

But Prime Minister Viktor Orban said the downgrade was due to measures “that hurt the interests of international capital in the short term” and expects the economy to improve.

Moody’s cited a “gradual but significant loss of financial strength” in its decision.

Meanwhile, the Financial Times has reported that banks will continue to cut their balance sheets if it means the country will gain access to more funding.

“The deleveraging has to go fast. That was part of the deal to keep ECB funding,” one sourced involved in bailout discussions told the paper. “The ECB felt there had to be an element of a stick.”

On Wall Street, investors are still wary regarding Europe’s debt problems. The Dow Jones Industrial Average dropped 19.90 points or 0.17% to 11,362.19.