australia business mood at nearly 3-year low

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    Australia business mood at nearly 3-year low
    By Victoria Batchelor Bloomberg News

    TUESDAY, MAY 10, 2005
    SYDNEY Australian business confidence fell to the lowest in almost three years in April because of weaker sales and profits, reinforcing expectations that the central bank may refrain from raising borrowing costs again this year, according to a survey released on Monday in Melbourne.

    The business confidence index fell for a third month to 2, the lowest since June 2002, from 7 in March, seasonally adjusted, according to the survey, in which 400 companies were polled by National Australia Bank.

    An index above zero indicates that companies expecting an improvement in their industry in the coming month outnumber those forecasting a deterioration.

    Companies including Coca-Cola Amatil, Asia's largest Coke bottler, and Paperlinx, the world's biggest paper distributor, have cut their earnings forecasts amid rising costs and slowing sales.

    Last week, the central bank said there was a case to leave borrowing costs unchanged "for the time being" after it raised the overnight cash rate target to a four-year-high of 5.5 percent in March.

    Companies' new orders fell in April. The index measuring forward orders dropped to a reading of minus 1, the first contraction in this series since June 2002 in seasonally adjusted terms, according to Monday's report.

    Other signs of a slowing economy include reports last week showing that retail sales stalled and that building approvals fell to a four-year low in March. Australia's economy, the fifth-largest in the Asia-Pacific region, grew 0.1 percent in the fourth quarter, the slowest pace in four years.

    Profit at Paperlinx in the second half ending on June 30 will fall about 40 percent, to 34 million Australian dollars, or about $26.3 million, based on its April 29 forecast of a 20 percent decline in full-year profit.

    Coca-Cola Amatil said last week that first-half profit growth would slow, citing stagnant sales in Australia.

    Employment growth has been a bright spot, with Australia's economy adding jobs in each of the seven months that ended in March, the longest run of gains since monthly figures began in 1978.

    The survey's overall business conditions index, which measures sales, profits and hiring in April, fell 4 points, to 6, according to seasonally adjusted figures.

    A reading higher than zero means that more companies say business was good last month than those saying it was poor.

    Newspaper job ads increase

    The number of jobs advertised in major Australian newspapers rose in April from a 17-month low, according to a survey by Australia & New Zealand Banking Group.

    Newspaper job ads last month rose 7.3 percent, to an average 22,615 a week, ANZ Bank said in a report released in Melbourne. Internet job ads rose 1.1 percent. The figures are seasonally adjusted.

    The total number of jobs advertised on both the Internet and in newspapers rose 2 percent in April. The number of newspaper job ads last month was 3.1 percent higher than the same month a year earlier; the number for Internet job ads rose 39 percent from a year earlier.

    Australia's unemployment rate was 5.1 percent in the four months to March, the lowest in 28 years.
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