The association says the latest official cut – the fourth consecutive one since the RBA started reducing rates in September 2008, reduces official interest rates to 4.25 per cent, their lowest level since December 2001. In the most aggressive interest rate cutting exercise ever, official interest rates have now been cut from 7.25 per cent to 4.25 per cent in the space of just three months.
The decision to cut official interest rates follows the release on Monday of sales and profit data confirming a slowdown of economic activity during the September quarter.
In trend terms, sales fell by 0.6 per cent in the printing, publishing and recorded media industry during the September quarter. Despite the fall however, sales were up by 5.7 per cent when compared to the same period a year earlier. During the 12 month period to September 2008, industry sales totalled approximately $22.2 billion, representing an improvement of 9.9 per cent on the same period a year earlier.
Pre-tax profits in the printing, publishing and recorded media industry were reported to have fallen by 4.5 per cent during the September 2008 quarter and were down by 9.5 per cent on the September 2007 quarter outcome. Pre-tax profits have now been reported to have fallen for three consecutive quarters.
Despite the recent reported deterioration, for the 12 months to September 2008, total pre-tax profits totalled almost $2.8bn in the printing, publishing and recorded media industry, representing an improvement of 4.8 per cent on the same period a year earlier, according to Printing Industries.
Manufacturing industry sales were flat during the September quarter while modest increases were reported for construction, wholesale trade and retail trade, and property and business services. The Mining sector defied the trend and reported strong sales during the quarter, the association says.
Commenting on the latest interest rate cut by the RBA, Hagop Tchamkertenian, national manager for policy and government affairs for Printing Industries says the aggressive interest rate cutting exercise of recent months shows how concerned the RBA is about economic prospects.
He says, “The RBA statement while stating that the Australian economy has been more resilient than other advanced economies, referred to a significant moderation in domestic demand and activity. Accordingly the RBA Board decided to take monetary policy to what it now deems to be an expansionary setting.”
Tchamkertenian also says the two arms of macro economic policy were now set in stimulus mode with the Federal Government’s fiscal measures set to commence next week and the likelihood of further fiscal measures in the new year.
He continues, “While the printing and associated industries should take comfort from this latest cut in official interest rates, the thing to remember is that interest rates continue to be cut because of ongoing concerns about economic prospects.
Tchamkertenian concludes that with the cost of finance falling significantly in recent months, it is now an opportune time for certain segments of the printing industry to be looking at the issue of capital investment.
He says, ”It still makes sense to invest in new technology even during subdued economic times provided that technology has the potential of delivering improvements to the bottom line by lifting productivity and reducing production unit costs.”
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