- Australian Business Conditions Jump to 2008 High in Show of Strength
Australian business conditions jumped to the highest level since February 2008, signaling the economy could be set to strengthen.
A gauge of business conditions — measuring hiring, sales and profits — jumped to 14 in March from 9 in February, the highest reading since January 2008, the National Australia Bank Ltd. survey showed. The index has gyrated in the first three months of the year and the March reading may have been influenced by a cyclone that hit Queensland late in the month, curbing responses from the state, NAB said. Business confidence slid to 6 from 7.
“Even so, conditions have improved almost across the board to levels that suggest a strong economy in the near-term,” said Alan Oster, chief economist at NAB. “That includes Western Australia, which has been looking better of late and suggests the worst of the mining downturn may be behind us.”
The Reserve Bank of Australia closely monitors business conditions as they reflect the immediate environment firms are operating in and give a snapshot of the economy at the time. Policy makers have cut interest rates to a record-low 1.5 percent to encourage industries outside mining where an investment boom is drawing to a close.
Today’s report, which surveyed more than 410 firms from March 27 to March 31, showed the improvement in business conditions was mainly driven by services and wholesale industries. There’s also been a rebound in the prices of iron ore and coal.
“The mining industry has been particularly impressive, having lagged well behind in recent years,” Oster said. “In contrast, the retail industry continues to be a concern with conditions falling further, dropping into negative territory. The apparent weakness in retail is driving our relatively downbeat outlook for consumption.”
Employment conditions were unchanged in the month, although holding at a level that suggests a healthier labor market than official statistics, Oster said. Australia’s unemployment rate jumped to 5.9 percent in February, the highest since the start of last year.
Business conditions soared in January, then fell in February as it gave back those gains, and are now surging again amid unusual volatility.
“There is still cause to be cautious about the longer-term outlook, particularly as other growth drivers, including liquefied natural gas exports, commodity prices and housing construction, begin to fade,” Oster said. “Meanwhile, the RBA has emphasized its financial stability concerns, which are expected to keep them on hold for the foreseeable future.”
Oil Prices Recover Slightly Amidst Demand Concerns in U.S. and China
Oil Prices Continue Slide as Market Skepticism Grows Over OPEC+ Cuts
Global oil markets witnessed a continued decline on Wednesday as investors assessed the impact of extended OPEC+ cuts against a backdrop of diminishing demand prospects in China.
Brent crude oil, the international benchmark for Nigerian crude oil, declined by 63 cents to $76.57 a barrel while U.S. WTI crude oil lost 58 cents to $71.74 a barrel.
Last week, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, agreed to maintain voluntary output cuts of approximately 2.2 million barrels per day through the first quarter of 2024.
Despite this effort to tighten supply, market sentiment remains unresponsive.
“The decision to further reduce output from January failed to stimulate the market, and the recent, seemingly coordinated, assurances from Saudi Arabia and Russia to extend the constraints beyond 1Q 2024 or even deepen the cuts if needed have also fallen to deaf ears,” noted PVM analyst Tamas Varga.
Adding to the unease, Saudi Arabia’s decision to cut its official selling price (OSP) for flagship Arab Light to Asia in January for the first time in seven months raises concerns about the struggling demand for oil.
Amid the market turmoil, concerns over China’s economic health cast a shadow, potentially limiting fuel demand in the world’s second-largest oil consumer.
Moody’s recent decision to lower China’s A1 rating outlook from stable to negative further contributes to the apprehension.
Analysts will closely watch China’s preliminary trade data, including crude oil import figures, set to be released on Thursday.
The outcome will provide insights into the trajectory of China’s refinery runs, with expectations leaning towards a decline in November.
Russian President Vladimir Putin’s diplomatic visit to the United Arab Emirates and Saudi Arabia has added an extra layer of complexity to the oil market dynamics.
Discussions centered around the cooperation between Russia, the UAE, and OPEC+ in major oil and gas projects, highlighting the intricate geopolitical factors influencing oil prices.
U.S. Crude Production Hits Another Record, Posing Challenges for OPEC
U.S. crude oil production reached a new record in September, surging by 224,000 barrels per day to 13.24 million barrels per day.
The U.S. Energy Information Administration reported a consecutive monthly increase, adding 342,000 barrels per day over the previous three months, marking an annualized growth rate of 11%.
The surge in domestic production has led to a buildup of crude inventories and a softening of prices, challenging OPEC⁺ efforts to stabilize the market.
Despite a decrease in the number of active drilling rigs over the past year, U.S. production continues to rise.
This growth is attributed to enhanced drilling efficiency, with producers focusing on promising sites and drilling longer horizontal well sections to maximize contact with oil-bearing rock.
While OPEC⁺ production cuts have stabilized prices at relatively high levels, U.S. producers are benefiting from this stability.
The current strategy seems to embrace non-OPEC non-shale (NONS) producers, similar to how North Sea producers did in the 1980s.
Saudi Arabia, along with its OPEC⁺ partners, is resuming its role as a swing producer, balancing the market by adjusting its output.
Despite OPEC’s inability to formally collaborate with U.S. shale producers due to antitrust laws, efforts are made to include other NONS producers like Brazil in the coordination system.
This outreach aligns with the historical pattern of embracing rival producers to maintain control over a significant share of global production.
In contrast, U.S. gas production hit a seasonal record high in September, reaching 3,126 billion cubic feet.
However, unlike crude, there are signs that gas production growth is slowing due to very low prices and the absence of a swing producer.
Gas production increased by only 1.8% in September 2023 compared to the same month the previous year.
While the gas market is in the process of rebalancing, excess inventories may persist, keeping prices low.
The impact of a strengthening El Niño in the central and eastern Pacific Ocean could further influence temperatures and reduce nationwide heating demand, impacting gas prices in the coming months.
Business3 weeks ago
Nigeria’s Logistics Sector Holds Untapped N3tn Potential, Says Courier and Logistics Management Institute
Black Market Rate4 weeks ago
Black Market Exchange Rate Today 14th November 2023
News4 weeks ago
Millionaire Powerplay Limited Unveils Unprecedented Odds in American Lotto’s Instant Cashless Payout
Forex4 weeks ago
Black Market Exchange Rate Today 16th November 2023
Black Market Rate3 weeks ago
Black Market Exchange Rate Today 21st November 2023
Telecommunications4 weeks ago
Airtel Africa Announces Interim Dividend Amidst Robust Half-Year Performance
Naira4 weeks ago
N-Power Dismisses Fake Recruitment Reports, Highlights Ongoing Payment Resolutions
Forex4 weeks ago
Naira’s Steep Plunge: Eight Major Firms Declare N918.1bn Revaluation Loss