Small business sales lift in September, Eurozone tipped to increase bailout fund: Midday Roundup

Small business sales lifted for the fifth consecutive month in September, according to the ANZ small business sales trends report.

The report, based on ANZ data on the value of credit, debit and Eftpos transactions through its merchant terminals and ANZ card transactions processed through other systems for businesses at least two-years-old with annual turnover less than $5 million, shows small business turnover increased by 5.2% year on year.

ANZ Head of Australian Economics and Property Research, Ivan Colhoun said year-to-date growth is “fairly flat” at 1.7%.

“And with headline inflation running at around 3.5% y/y in 2011, this implies real (inflation-adjusted) small business sales growth is still relatively weak in September,” Colhoun says.

The report also shows that services and trade sectors outperformed retailers, with small retailers recorded 2.6% year on year growth versus 6.8% annual growth for non-retail and services small business.

The leading states were Victoria, South Australia and Western Australia.

Eurozone to increase bailout funding

The Eurozone will increase its bailout fund in order to help contain the sovereign debt issues that are plaguing the continent, according to a new Associated Press report based on a leaked document.

The document reportedly shows the zone is planning to boost the fund, which is currently at $587 billion, by offering bund buyers more insurance and working with private investors.

The document, which is believed to be a draft, states that the fund would combine “public and private capital to enlarge the resources available”.

It also notes that if a default occurs, “the investors could surrender the partial protection certificate” and “receive payment in kind with an EFSF bond”.

The move comes as Greece has recently passed its own austerity measures in order to control the country’s debt and stave off a default.

RBA hints at rate rise as inflationary pressures ease, global economic pressures rise

The Reserve Bank of Australia has again indicated its willingness to cut rates, citing recent cuts in underlying inflation estimates and the softer global economic outlook.

In a speech this morning, RBA deputy governor Ric Battellino said “inflationary pressures, which had declined through 2010, appeared to pick up noticeably in the first half of 2011 and the prospects were that inflation would rise to above the target range of 2-3% over the next couple of years.”

“The downward revisions to recent estimates of underlying inflation and the softer global economic outlook have made the outlook for inflation less concerning, providing scope for monetary policy to be supportive of economic activity, if needed.”

Battellino also described the Eurozone debt crisis as “particularly disturbing since the authorities need to agree on policies that deal simultaneously with excessive government debt, weak banking systems, soft economic activity and sharp differences in competitiveness among European countries.”

The speech adds to expectations the RBA might slice rates from 4.75% at its November meeting, the first move in 12 months.

It follows the release of price inflation yesterday showing a 0.6% rise, lower than the previous quarter’s 0.8% jump.

ANZ expects a rate cut on Melbourne Cup.

Shares flat despite strong US lead

The Australian sharemarket has opened flat this morning after a strong lead in the United States, where a positive earnings season has investors confident.

The benchmark S&P/ASX200 index was down 11 points or 0.3% to 4243.8 at 12.00 AEST, while the Australian dollar fell to a six week high of $US1.04c on news the Eurozone would move to boost its bailout fund.

ANZ shares lost 0.14% to $21.68, while Commonwealth Bank shares rose 0.47% to $49.01. Westpac lost 0.23% to $22.11 as NAB lost 0.8% to $24.74.

In the United States, the Dow Jones Industrial Average gained 104 points or 0.9% to 11,913.6.