Australia: Mixed Q3 business indicators - Westpac

In view of Andrew Hanlan, Research Analyst at Westpac, the income side of Australia’s business indicators for Q3 was a little more positive than anticipated, but was not sufficient to shift their forecast for Q3 GDP of 0.8%.

Key Quotes

“Inventories met our expectations.”

“Company profits

• Company profits declined by less than anticipated, -0.2% vs a forecast -1.8% (market was +0.1%).
• Mining profits did ease back on softer commodity prices, -3.3% vs our forecast of -4%
• The surprise was on non-mining profits, which can be volatile quarter to quarter. The resilience in the period was despite patchy consumer spending and margin squeeze.
• Note, that company profits on an adjusted basis, increased by 0.3% in the quarter (exceeding our forecast of -1.4%). This adjustment attempts to place the measure on a basis consistent with that in the national accounts.”

“Wage incomes

• Nominal wage incomes (that is, wages and employment) increased by 1.1% in the quarter, broadly meeting our expectations. Employment and hours worked rose solidly in the period, up 0.9% and 0.6% respectively. The implied average compensation of employee advanced, up 0.2%, a still weak result but an improvement on the small decline reported for Q2.”

“Inventories

• Inventories consolidated in Q3, up 0.2%, adding 0.2ppts to activity in the third quarter – both as we expected.
• That follows an inventory clearance in the June quarter, as rail links to the ports were re-opened following flooding in Q1.”