Construction in Australia Shrinks

123jump.com Staff
05 Dec, 2008
New York City

Australian construction industry shrank for the ninth month in a row in November as housing market demand falls. Weak demand, tight lending and falling employment are dragging the housing sector. Sydney stocks fell 1.2%. Four largest banks are expected to offer loans to domestic car industry.

[R]3:00AM New York, 7:00PM Sydney- Construction industry shrinks for the ninth month in a row in November. Australia’s big four banks to provide A$2 billion loans for the car industry.[/R]

Australian market averages dropped as commodity stocks retreated on mounting worries that the increased government spending will not stop economy from weakening.

In Sydney trading ASX 200 fell 1.2% or 42.5 to 3,489.90.

Of the ASX 200 index stocks, 67 rose, 116 declined, and 17 were unchanged. Felix Resources led advancers in the index shares with a rise of 36.6% after the company reported that it may receive takeover bid.

There are reports that the coal miner is in discussions with Yanzhou Coal Mining for A$3 billion takeover.

Construction Industry Shrank, Ninth Monthly Decline

Housing Industry Association indicated that the construction industry shrank for the ninth straight month, falling 4.4 points to 32 in November.

Australian Industry Group (Ai Group) Associate Director Economics and Research, Tony Pensabene, said there is “further deterioration in house and apartment construction” on tight conditions obtaining in the credit markets and falling demand.

The report notes that new orders for the construction industry have dropped to the lowest in 38 months. Ai Group forecasts that residential construction activity will continue to fall into early 2009.

HIA Chief Economist Harley Dale commented, “The sustained deterioration in the Australian PCI that is still occurring late in 2008 reinforces our assessment that the short term prospects for the housing industry are poor.”

Australia Bank to Set up SPV to Provide A$2 billion to the Car Industry

The Australian reported that Treasurer Wayne Swan said that four largest domestic banks - Commonwealth Bank, National Australia Bank, ANZ and Westpac - will set up a special purpose vehicle to provide financial support for the troubled car industry.

The special purpose vehicle will be implemented by January 1, 2009.

Gainers & Losers

Felix Resources led gainers in the ASX 200 index shares with a rise of 36.6% followed by increases in HFA Holdings of 11.1%, in Centennial Coal of 9.5%, in Seven Network of 9.3%, and MacMahon Holdings of 6.9%.

Felix Resources soared after the company reported that it is in talks with Yanzhou Coal Mining for a possible A$3 billion takeover.

Babcock & Brown led decliners in the ASX 200 index shares with a fall of 34.6% followed by losses in Centro Retail Group of 16.9%, in Babcock & Brown of 16.3%, in Babcock & Brown of 13.5%, and Australia Worldwide Exploration Ltd. of 11%.

Commodity stocks fell after crude oil prices declined 6.7% to $43.67 per barrel and copper prices slid to $1.5000 per ton. Fortescue Metals fell 9.4% and Platinum Australia shed 6.4%.