Management Blog

Economic slowdown could foster fraud: KPMG

If the Australian economy experiences a downturn we can expect to see more incidents of workplace fraud, accounting giant KPMG warns.

KPMG's head of financial services, Andries Terblanche, says fraud is destined to become a more common problem for businesses as a result of rising interest rates and an increase in the cost of living.

While banks and other financial institutions are most at risk, KPMG says the issue of fraud has a potential to affect all areas of business during an economic down-cycle, the ABC reports.

Good and bad news for retail

Economists predict consumer spending will grow by approximately 4% in the first half of 2008 before experiencing a decline as the year continues, Smart Company reports.

Electronics – including digital cameras and flat screen TVs – overseas travel, fashion and male grooming products are all predicted to sell strongly in the first half of the year.

Categories that have been identified as facing the prospect of slowing sales are home furnishing, gardening products as well as newspapers, books and magazines.

Analysts say the second half of 2008 will see an overall decline in retail spending as a result of growing concerns about household debt.

Economy strong heading into '07

The Westpac-Melbourne Institute index of economic activity indicates the Australian economy strengthened by 1.2 points (0.5 per cent) during October, The Age reports.

This increase takes the economy's annual growth rate to 5.5 per cent; a movement economists say indicates a long term trend of 4.2 per cent growth over the next three to nine months.

Westpac says that due to its impact on inflation, continued growth will put pressure on the Reserve Bank to increase interest rates this year, possibly as soon as early February.

Wages on the rise

Australians are taking home larger pays than this time last year according to new Australian Bureau of Statistics figures that show a 4.2 per cent increase in wages over the year to September.

Citigroup economists say the increase is not a cause for concern with regard to interest rates as wages would need to rise by more than 4.5 per cent for the RBA to take immediate action.

The HSBC is also positive about the news saying the figures prove wage pressures are under control even though the economy is booming and the labour market is tight.

Strong dollar good for Xmas trade

The Australian Retailers Association says the strengthening Australian dollar should result in lower prices for shoppers in the lead up to Christmas, news.com.au reports.

Australian Bureau of Statistics data reveals the cost of imported goods are currently at their lowest level in 15 years with imports dropping 5 per cent since June this year alone.

Commentators say the high Aussie dollar may soon see a record number of consumers bypassing local retailers and going online to purchase cheaper items directly from the US.

Manufacturing boom continues

The nation's manufacturing activity increased in July as a result of strong consumer spending, high employment rates and a healthy construction industry, The Australian reports.

The Performance of Manufacturing Index (PMI) – which is recorded by the Australian Industry Group and PricewaterhouseCoopers Australian – increased 4.3 points in July to 57.4 points.

All states enjoyed an expansion in manufacturing production with Queensland, Western Australian and Tasmania reporting the strongest growth over the last month.

Experts say food and beverages, clothing and footwear, construction materials, chemicals, petroleum and coal sectors all look set for continued growth.

Manufacturing's global hot spots

Timing is everything for manufacturers looking to establish offshore operations according to Industry Week magazine, which has developed a list of global manufacturing hot spots.

The article claims identifying new manufacturing regions is important as being somewhere first enables a company to attract good staff and government incentives before the competition.

Talent is the key determinant in the identification of a country's manufacturing potential. For example, Kenya is a prized destination as it offers a well-educated, sophisticated workforce.

Other manufacturing hot spots listed include Vietnam, Russia, Egypt, Czech Republic and South Africa.

Smaller cars lead sales growth

The issue of high fuel prices is making its presence felt in the car industry with an increasing number of Australians choosing to switch from large to smaller cars, news.com.au reports.

The article cites an Australian Bureau of Statistics study that claims four wheel drive sales fell for the first time during the course of this year.

Overall new vehicle sales fell by 0.5 per cent in May this year; however, over the year until May vehicle sales were 6.6 per cent higher than last year.

As a result, 2007 is shaping up to be a record year for car manufacturers; economists say the industry is on track to break 2005’s sales figure of 988,269, the largest to date.

China’s future may not be so rosy

A new book on the future of China entitled The Writing on the Wall questions the prevailing view by Western economists that the populous republic is poised for global economic dominance.

To back his argument author Will Hutton points out a number of hurdles he believes will hinder the Chinese economy.

In its review of the book The New York Times summaries these as being difficulties with exchange-rate policy, financial sector issues and the inefficiency of state-owned enterprises.

For Hutton, a fundamental problem for China is its lack of democracy; a related issue is environmental destruction, which he claims is proceeding without media or public scrutiny.

SMEs are taking notice of VoIP

Less than 10 per cent of Australian businesses currently use the Internet to make phone calls. However, you can expect this number to grow as more SMEs discover the cost savings of VoIP (Voice over Internet Protocol), The Age reports.

Using a VoIP service it is possible to call other VoIP users free of charge and make landline or mobile phone calls at low rates.

While VoIP services such as Skype are popular in the residential market many businesses are avoiding Internet voice calls due to concerns about audio quality.

Call quality wasn’t an issue for any of the businesses mentioned in article; each seemed more than happy with VoIP as a result of significant cost savings on international and interstate calls.