"The result highlights the low levels of business confidence, the impact of actual cuts in government spending and fears of further spending cuts in the coming federal budget"
- Innes Willox, AIG's chief executive officer
Producer prices in Australia added 0.3% in the first quarter of 2013, showing that both businesses and consumers are more confident about the economic outlook and showing willingness to increase their spending. The boost was mostly provided by increases in the prices received for building construction, other agriculture and petroleum refining and petroleum fuel manufacturing, which added 0.8%, 6.1% and 4.2%, respectively. However, gains were limited by fall in the prices received for pharmaceutical and medicinal product manufacturing, which shrank 4.8%.
Also Friday, the Australian Industry Group and Commonwealth Bank of Australia said that the nation's services industry dropped in April by the most in a year, amid weakening domestic demand. The services index dropped to 44.1 from 49.6 in March, posting the biggest drop since April 2012.
"The result highlights the low levels of business confidence, the impact of actual cuts in government spending and fears of further spending cuts in the coming federal budget," Innes Willox, AIG's chief executive officer, said in a statement. "In the face of general weakness across large sections of the domestic economy, now is not the time to be cutting back on aggregate spending and raising taxes."
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