Australian and New Zealand consumers are showing signs of resilience as slower growth in Asia and Europe’s debt crisis inhibit a global expansion.
Australian consumer confidence advanced 4.2 percent this month to the highest level since November as two interest-rate cuts late last year improved households’ outlook, a Westpac Banking Corp. (WBC) and Melbourne Institute survey showed. Across the Tasman Sea, a government report in Wellington showed retail sales gained 2.2 percent last quarter as the nation hosted, and eventually won, the Rugby World Cup.
New Zealand’s record-low borrowing costs and Australia’s rate reductions are helping insulate households even as slower global growth increases risks to commodity prices that drive growth in both economies. Demand from Asia for the nations’ agricultural, mineral and energy exports helped elevate the currencies of both countries last year to their highest levels since they were freely floated in the 1980s.
“Consumers on both side of the Tasman are holding up well despite global uncertainties,” said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., a unit of the world’s biggest interdealer broker.
Asian stocks rose, trimming yesterday’s losses, as optimism Greece will commit to austerity measures and the yen’s drop to a three-month low against the dollar boosted the earnings outlook for Asian exporters. The MSCI Asia Pacific Index gained 0.5 percent to 125.66 as of 10:43 a.m. in Tokyo after falling 0.6 percent yesterday.
In Singapore, retail sales probably rose for a 10th month, economist predicted before a Statistics Department report today. The retail sales index rose 5.2 percent from a year earlier in December, a Bloomberg News survey of nine economists showed.
In Malaysia, economic growth probably cooled as the European debt crisis hurt exports, a poll showed.
Gross domestic product rose 4.8 percent in the three months through December from a year earlier, compared with 5.8 percent in the previous quarter, according to the median of 20 estimates in a Bloomberg News survey before a report today. Southeast Asia’s third-largest economy probably grew 5 percent in 2011, down from 7.2 percent the previous year, a survey of 18 economists showed.
In the day ahead in Europe, the region’s two biggest economies France and German probably contracted last quarter from three months earlier, Bloomberg surveys showed before reports today. Euro-area GDP figures are also scheduled to be released.
Preliminary figures will show France’s GDP fell 0.2 percent in the fourth quarter, according to the median estimate of 25 economists surveyed. In Germany, final figures are predicted to show the economy shrank 0.3 percent from three months earlier, according to the median of 43 estimates.
In the U.K., unemployment probably held at a 16-year high, a Bloomberg survey showed before a report today. The jobless rate based on International Labour Organization methods remained at 8.4 percent, the highest since January 1996, according to the poll of 23 economists.
In the U.S., industrial production probably advanced 0.7 percent in January from a month earlier, when it gained 0.4 percent, a survey of 81 economists showed before a Federal Reserve report in Washington today.
The U.S. central bank releases minutes of the Federal Open Market Committee’s January meeting today. Manufacturing in the New York region probably expanded in February, according to the median estimate of 56 economists before the New York Fed’s index is released.
Manufacturers and exporters are struggling in the South Pacific’s two major industrial economies, hurt by stronger currencies. The Australia and New Zealand dollars are the two biggest gainers in the past 12 months against the U.S. currency among the Group of 10 currencies tracked by Bloomberg.
Exports account for 30 percent of New Zealand’s gross domestic product and make up 22 percent of Australia’s economy, government data show.
The so-called Aussie was little changed today, buying $1.0677 at 12:31 p.m. in Sydney from $1.0691 late yesterday in New York, and has increased 7.2 percent from a year ago. The New Zealand dollar, little changed at 83.31 U.S. cents today, has advanced about 11 percent from a year ago.
Commonwealth Bank of Australia, the nation’s biggest lender, said today that first-half profit rose 19 percent as fewer loans soured. Net income in the six months ended Dec. 31 climbed to A$3.62 billion ($3.87 billion) from A$3.05 billion a year earlier, according to an e-mailed statement by Sydney-based lender. That exceeded the median estimate of seven analysts surveyed by Bloomberg News for profit of A$3.51 billion.
Commonwealth Bank’s business and private banking profit rose 10 percent to A$551 million, while retail banking earnings increased 3 percent to A$1.44 billion, according to the statement.
Moody’s Investors Service said today Australian corporate borrowers are well placed to weather global turbulence. “Most companies are well positioned within their ratings and have sufficient flexibility to manage the more challenging operating environment that we expect in 2012,” said Ian Lewis, a Moody’s vice president and senior credit officer, in a statement.
Reserve Bank of Australia Governor Glenn Stevens reduced the overnight cash rate target by a quarter percentage point on Nov. 1 and again on Dec. 6 as inflation pressures eased and risks to global growth increased. It unexpectedly held the benchmark at 4.25 percent last week, sending the local currency to a six-month high of $1.0845.
In New Zealand, Reserve Bank Governor Alan Bollard has kept the official cash rate at a record-low 2.5 percent since March to revive confidence after earthquakes in the southern city of Christchurch. Bollard said last month he wasn’t uncomfortable with market expectations of no rate change through this year.
In New Zealand today, “retail posted its strongest growth ever in core terms,” while in Australia “the lift in confidence we saw today should help keep spending at a solid pace,” ICAP Australia’s Carr said.
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