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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Snowshoe who wrote (72621)	2/24/2010 8:10:25 PM
From: Haim R. Branisteanu	Read Replies (2) of 74559

Australia 4Q Business Investment Surge A Spur For RBA Rate Hike By James Glynn Of DOW JONES NEWSWIRES SYDNEY (Dow Jones)--Australian business investment surged in the fourth quarter, providing a potent reminder of the rapid recovery likely to take place in the economy in 2010 and highlighting the need for policy makers to adopt some renewed haste in moving to normalize interest rates. Private new capital spending on buildings and equipment in Australia rose 5.5% to A$27.74 billion in the quarter from A$26.29 billion in the third quarter, the Australian Bureau of Statistics said Thursday. Economists on average had expected that spending in the fourth quarter rose 2.0% on a quarterly basis. The outlook for investment in 2010-11 is also upbeat, with firms estimating total expenditure of A$101.39 billion, up 15.3% from the corresponding estimate for 2009-10, the ABS said. The data will bump up economists' estimates for fourth quarter economic growth data, which is due out Wednesday, and will add to the case for the Reserve Bank of Australia to raise rates at its policy meeting on Tuesday. "This sort of demand from business will push the Australian economy towards full capacity," said Joseph Capurso, currency strategist at the Commonwealth Bank of Australia. "That's a real stretch and it is very inflationary. The RBA will look at this with a bit of concern as the Aussie economy will be at full capacity in a quick time, especially when you look at unemployment." The Australian dollar nudged higher on the data. At 0103 GMT, it was trading at US$0.8935. -by James Glynn, Dow Jones Newswires;

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