consumer behaviour has created a difficult trading environment for some businesses, coming as it has after a prolonged boom. but the adjustment in australia has been benign compared with the adjustments in household finances and housing markets elsewhere in the world, and it has put household spending and financing on a more sustainable path. this will ultimately benefit the health of the economy. in the case of business investment, there is a clear dichotomy between the resource and non - resource sectors of the economy. investment by the former is very high at present, and much more lies ahead. outside the resources sector, however, business investment is relatively flat. in some cases this is due to the dampening influence of the high exchange rate, with the manufacturing and tourism industries particularly affected. in the case of tourism, the problem is not so much that foreign tourists have stopped coming to australia but that many more australians are going overseas. overseas trips by australians are running about 60 per cent higher than five years ago. given the increase in overseas travel, it is not surprising that the traditional holiday destinations in australia, such as the gold coast and north queensland, are currently among the weaker parts of the australian economy. in other sectors, such as commercial property, the weakness is mainly the result of investors and lenders having to deal with the consequences of over - gearing in the pre - 2008 period. when too much borrowing and lending occurs, as it did in this sector, it can take many years for the excesses to be unwound. some large adjustments have already taken place in the commercial property sector but the process probably still has further to run. while the sectoral composition of business investment is uneven, the overall growth of investment has been very solid, with a rise of 6 per cent in the first half of 2011. overall, private demand is rising solidly, and taking the place of public spending, which is now growing more slowly as earlier fiscal stimulus is unwound. total final demand grew by 3. 4 per cent over the year to june, which is about in line with past trends. that, however, has not translated to trend growth in gdp, as the high exchange rate and the high import content of some mining investment have seen an increased proportion of demand being met from imports, rather than domestic production. the weatherrelated disruptions to coal exports added to the shortfall in production. in this environment, employment growth slowed noticeably in the first half of the year, and around the middle of the year

markets for such instruments as corporate bonds and cp. on the other hand, credit demand of private firms continues to lack momentum as corporate demand for external funds is subdued, since firms ’ cash flow is at a high level. moreover, firms continue to reduce their debts as part of their balance - sheet restructuring measures. as a result, credit demand in the private sector has continued to be basically stagnant. in view of this, the underlying tone of private banks ’ lending remains sluggish. the amount outstanding of corporate bonds issued continues to be above the previous year ’ s level but the growth rate is slowing somewhat. meanwhile, the amount outstanding of cp issued remains at a high level. recently, the growth rate of money stock ( m2 + cds ) is increasing reflecting the inflow from postal savings. funding costs for firms continue to decline as both short - and long - term prime lending rates were lowered, reflecting the decrease in market interest rates. in this financial environment, the lending attitude of financial institutions and corporate financing conditions remain easy. for the time being, attention should be paid to the effects of the additional monetary easing measures taken by the bank, while careful monitoring is still required for the effects of stock price developments on the behavior of financial institutions and the fund - raising conditions of firms.