Fed: Interest rates to stay on hold

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Fed: Interest rates to stay on hold

By Krista Hughes, Economics Correspondent

CANBERRA, Aug 5 AAP - Home-owners should expect no cut in interest rates this week,with further evidence today the domestic economy was picking up speed despite weak exportsand the drag of the drought.

Newspaper job advertisements rose 1.4 per cent in July, while vacancies advertisedon the internet rose 12.8 per cent, indicating employment should start to grow again incoming months.

And a poll of business executives found the emerging global economic recovery and abooming domestic economy helped inflate business expectations to their highest level sincethe middle of 2000.

The ANZ's monthly survey of job advertisements said newspaper ads rose for the third month.

Total job advertisements rose 9.8 per cent to a two-year high, although ANZ chief economistSaul Eslake said the rise was driven by a blip in the internet figures.

But he said jobs seemed likely to turn around after falls in four of the past five months.

"That would be consistent with other evidence pointing to an upturn in consumer spending,a rebound in house (as opposed to apartment) construction, and the beginnings of a recoveryin tourist arrivals," Mr Eslake said.

Evidence of strong retail trade and housing approvals last week has convinced mosteconomists the Reserve Bank will leave interest rates on hold at its meeting tomorrow.

CommSec senior analyst Craig James said the improvements in the job market confirmedthe economy was gathering pace, and that the rate freeze would continue.

"The Reserve Bank board faces one of its easiest decisions in many months," he said.

"The board meets tomorrow, and will take little time in leaving official interest rateson hold for the 14th consecutive month."

Dun & Bradstreet's survey of 1,200 business owners and executives found expectationsrising both for the December quarter and actual results in the June quarter.

More than 40 per cent of executives said their businesses performed better in 2002-03,and 13 per cent had increased staff wages over the past six months.

D&B Australia and New Zealand chief executive Christine Christian said executives beganthe financial year on an upbeat note.

"Evidence of a slowdown in activity is yet to appear on the radar screen for most executives,"

she said.

But a separate poll by the Australian Chamber of Commerce and Industry (ACCI) foundthe economy was weaker than it had been 12 months ago, and pointed to a general expectationthat economic conditions would continue to slow.

ACCI's quarterly survey of business expectations found companies were more positiveabout Australia's economic performance than they had been in the previous quarter.

But managers' perceptions of conditions within their own businesses fell sharply.

ACCI chief executive Peter Hendy said the continuing signs of softness in the economyshowed the Reserve Bank should cut interest rates tomorrow.

AAP kmh/sw/ak/bwl

KEYWORD: ECONOMY NIGHTLEAD