Tuesday, June 09, 2009

Not exactly on the mend, but...

The only big international organisation to foresee the global financial crisis believes the worst of it may have passed.

The Swiss-based Bank for International Settlements says "glimmers of hope" are sparking a "rebound of risk appetite among investors," pushing up borrowing by more than a quarter so far this year.

"The key economic indicators remain at depressed levels," the Bank says in its latest quarterly report. "But investors are focused instead on incipient signs that economic conditions are deteriorating less rapidly than before, while intensified policy actions to counter the crisis have helped bolster confidence".

In Australia the latest Dunn & Bradstreet survey finds businesses more positive with expected expected sales, profits and employment all improving from a low base...

The sales expectations index is up 16 points to minus 32, the profits index up 17 points to minus 40 and the employment index up 2 points to minus 24.

Around 8 per cent of the employers surveyed say they now expect to put on more staff, compared to 32 per cent who expect to downsize.

Dun & Bradstreet consultant, Duncan Ironmonger, said the survey indicated that, after "a very bleak June quarter, there would be some improvement in the September quarter".

"In July, there is an income tax cut and government infrastructure spending will have an increasing positive impact on jobs and incomes in the quarters to follow,'' Dr Ironmonger said.

The next round of employment figures to be released Thursday are nonetheless expected to be grim.

Officially Australia's unemployment rate fell from 5.7 per cent to 5.4 per cent from March to April in what market economists interpret as statistical noise.

Westpac believes the rate returned to to 5.7 per cent in May and will eventually climb above 8 per cent. It expects the Thursday's figures to show that an extra 30,000 Australians have lost their jobs.

The bookmaker Centrebet is also offering the shortest odds on an unemployment rate of 5.7 per cent and is offering a good return to anyone prepared to punt their money on Australia continuing to avoid a so-called "official recession".

Although the March quarter growth figures released last week had Australia avoiding the two consecutive economic contractions commonly taken to define a recession, the Alice Springs based betting agency will pay $1.85 to anyone prepared to punt $1.00 on Australia continuing to remain out of the woods.

Dunn & Bradstreet found that only 6 per cent of executives expect to increase their investment spending in the year ahead, while 17 per cent plan to cut it.

The Bank for International Settlements distinguished itself from the International Monetary Fund, the World Bank and the Organisation for Economic Co-operation and Development by pointing to the dangers of an global financial crisis ahead of it starting in 2007.

It says in its quarterly report that economic data is turning out to be less gloomy than expected, particularly in the United States. Business and consumer confidence is rebounding in the US and across Europe. Only in Japan does positive news "remain scarce".