Australian consumers ended 2002 on a strong note with retail sales up 1% on the market forecasts in ...
Australian consumers ended 2002 on a strong note with retail sales up 1% on the market forecasts in November.
Sales rose by 1.7% in November from the previous month, against a forecast of 0.7%.
Hugh Young, managing director of Aberdeen Asset Management Asia, says the consumer was supported by a robust labour market, historically low interest rates and positive real wages growth.
However, he adds, there are signs the recent strong momentum of the labour market is beginning to ease.
One such sign, he says, is that the job vacancies series produced by the Australian Bureau of Statistics, which shows job availability and is one of the leading indicators of labour market strength, fell by 3.5% in the three months to November 2002, reversing the 3.5% rise seen over the previous three months.
Job vacancies were up 10% over the year, compared with a 12.6% rise in the final quarter. Young says this data appears consistent with the loss of momentum evident in other leading labour market series, such as newspaper employment advertising.
The main Australian equity index, the S&P/ASX 200, has had a positive start to 2003, rising 6.57% in US dollar terms to 14 January. This comes after a marginal fall of 0.19% in US dollar terms for the year ending 31 December 2002.
William Calvert, fund manager at Framlingon, says this performance is reasonably strong compared to markets such as the US, UK and Europe.
The Australian economy has been doing well because it did not see any of the excesses witnessed in the US market, Calvert believes.
In his eyes, it combines the best characteristics of the successful Anglo-Saxon economies.
Calvert says the economy has been helped by strong tourism, boosted by the Sydney Olympics in 2000. As a result, he says, the stock market has been very dull on aggregate, which has been good news for investors in volatile times.
'If you are expecting a spectacular recovery in technology in Asia, Korea and Taiwan will outperform and money will be taken out of Australia,' he notes.
'However, if 2003 is another dull year, Australia, with its safe haven status, should again do well.'
Calvert adds the Australian market is supported by domestic investors providing steady fund inflows, with marginal flows coming from overseas investors.
Financials make up 40% of the S&P/ASX 200 and are yielding more than Australian government bonds, increasing the attractiveness of the sector, Calvert says.
The financial index rose 4.38% over the year to 31 December 2002 and has climbed 6% in the year to 13 January in US dollar terms. The top-performing sector at the start of 2003 is the information technology sector, with posted growth of 14.52%.
One slight concern for the market, says Calvert, is that the current account deficit has been rising slightly.
However, he adds it is still at a manageable level and the rise is largely due to the recent drought the country has suffered.
Retail sales higher than market forecasts.
ASX 200 Index has had positive start to 2003.
Oil prices are picking up.
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