Last week certainly contained a few snippets of business news which both surprised many analysts and gave a strong pointer to where technology is going. Firstly there was the disclosure that Apple is now a larger company in market capitalisation than MicroSoft, and if that wasn’t a big enough surprise came the news that Google ads are now being placed by over 1.5 million companies in the USA. Google also said its global workforce now exceeds 20,000.

Exceeding the improving retail figures are sales of new motor vehicles which have surged an excellent 8 percent in the last set of monthly figures. This was in sharp contrast to the previous month’s 3 percent decline and up an incredible 29 percent on the equivalent period last year. Car finance is now readily available which has also helped to improve retail figures. The boost in the economy with greater consumer confidence has certainly helped the increase in car sales.

The Real Estate Institute’s two biggest branches are speaking with two voices right now. The problem is while Melbourne continues on a boom, Sydney is still in a slump, and their reasons why are just as varied as the two cities’ auction results. Certainly at this rate, Melbourne prices will soon be nearly at Sydney levels. The overall impression for those in the industry is the recent sense of urgency among some buyers has now lessened with sanity returning to this vital market. Meanwhile, the Housing Industry Association (HIA) has joined the debate saying new home building continues to recover very slowly with nowhere near the numbers needed to stop fueling the present rate of house price increases.

Federal treasury boss, Ken Henry, has surprisingly entered the current mining debate by insisting it was not that sector which kept our economy out of the recent GFC, but good national economic management. But his recent revelation did concede that our Asian raw materials markets proved extremely strong, especially China, which should see the Federal budget return to surplus by 2011.

To the surprise of many, economic analyst Ernst & Young has stated their research is showing current volatility in financial markets will not deter merger and acquisition activity planned in the next 6 months. And amazingly they say that almost one in two Australian companies plan to make an acquisition amid what is in reality improving confidence in capital and credit markets.

Global credit ratings agency, Moody’s Investor Service, says the outlook for Australia’s building societies is stable and improvements are inevitable due to their sound deposit base and a solid economic outlook for the future. The most interesting statistic they issued was that customer deposits have climbed 68 percent of total funding in the past year.

The Board of the Reserve Bank of Australia (RBA) has announced the basic cash rate will be held at 4.5 percent. Three consecutive rate rises and renewed risk aversion made a powerful case for inaction. A fair amount of the decision is devoted to the developing European issues. The RBA notes that “at this stage, global growth is still expected to be at about trend pace in 2010”. This comment is a tad weaker than the “modestly above average” rate of global growth anticipated in the May Statement on Monetary Policy (SMP).

Nevertheless, the inflation risk case for higher rates eventually remains intact, however. Australian growth is set to run around trend, the commodity-income boost is yet to flow through the economy and inflation appears likely to be in the upper half of the target zone over the next year. It is believed that the cash rate will be 5 percent by late 2010 and a move towards 6 percent in 2011.

The Organisation for Economic Co-operation and Development (OECD) has suddenly issued a rates warning about the Australian economy. The normally conservative OECD now says: ‘at least four more rate rises in the year ahead’ which will result in home loan interest rates hitting 8.5 percent. Interestingly, our interest rates are already the highest in the developed world and only exceeded by smaller economies such as Turkey, Poland, Mexico and Iceland.