Manufacturing index lifts, still in contraction mode: Midday Roundup

A key manufacturing index lifted in October but remains in contractionary territory, with the high Australian dollar and cheap imports still pressuring the key sector.

The Australian Industry Group/PriceWaterhouseCoopers Australian Performance of Manufacturing Index (PMI) lifted 5.1 points last month to 47.4, but remains below the 50 point mark, which separate contraction from expansion.

Australian Industry Group (Ai Group) chief executive Heather Ridout is downbeat on the prospect of an increase in the short-term. Decline in activity were most felt in the clothing and footwear sub-sector and those linked to the construction industry.

“While it is encouraging that the pace of the decline in manufacturing activity eased in October, the sector remained in negative territory,” Ridout says.

“New orders remained soft suggesting that there are no real signs of a substantial, near-term pick up in the sector.”

Stocks weaker ahead of rates decision

The Australian sharemarket is trading weaker for the second day running, as traders await this afternoon’s rates decision by the Reserve Bank and follows negative session on Wall St and in European markets overnight.

The Australian dollar is trading up slightly at $US1.056 ahead of the rate decision, which most economists expect will be a 25 basis point cut to 4.5%.

At 11.30am, the S&P/ASX 200 was down 0.94% to 4257.9 and the broader All Ordinaries index was down 0.9% to 4321.2.

Qantas continued its good run, up 3% to $1.66 as flights resumed after Fair Work Australia ruled early yesterday morning to terminate industrial action.

Telco giant Telstra was also 0.65% higher to $3.12, although the big banks and major miners were all weaker in morning trade.

Wesfarmers raises $500 million

Wesfarmers has raised $500 million though the issue of fixed-rate notes, the company has announced.

In a statement, the company said the notes were issued in order to take advantage of higher market sentiment in recent days, and also said the note issue was a continuation of its strategy of lengthening debt maturities, according to AAP.

Greece to hold referendum on debt deal

Greek Prime Minister George Papandreou has called for a confidence vote regarding the European Zone’s new debt deal.

“On this roadmap of political initiatives I ask for a confidence vote,” he said in Parliament.

“An expression of confidence in the policy to be followed is more necessary than ever,” Papandreou said, adding that the referendum would be held early next year.