Australia’s company profits recorded a small decline in the third quarter. Profits fell 0.2 percent sequentially after falling 3.3 percent in the second quarter. Market had projected a small rise of 0.1 percent. Non-financial profits, after adjusting for inventory valuations rose 0.3 percent sequentially.
A 3.3 percent drop in mining profits drove down the headline profits as lower commodity prices more than countered rise in export volumes. However, non-mining profits were up 1.3 percent sequentially and are now expanding at an annual pace of 14.2 percent. The strength in non-mining profits is in line with higher business conditions and reported profitability in the business surveys. The ongoing uptrend in non-mining profits are expected to continue to underpin the promising growth in non-mining business investment currently underway, noted ANZ in a research report.
Meanwhile, growth in the wages bill came in strong in the third quarter, underpinned by solid growth in employment. The wages bill was up 1.1 percent sequentially, after a 1.7 percent growth in the second quarter, bringing the annual growth to 2.5 percent. The upward revision might hint at a revision to the GDP measure of average wages. In all, the strength in the wages bill slightly counters flat profits in the third quarter GDP and widely the lift in the wages bill will underpin growth in household incomes and consumption, stated ANZ.
Inventories rose 0.2 percent sequentially in the third quarter after falling 0.5 percent in the second quarter.
“This was a touch stronger than ANZ’s and market expectations (flat q/q), and suggests that stocks will add 0.2 ppt to GDP growth in Q3”, said ANZ.
According to ANZ, the Australian economy is expected to have grown 0.8 percent sequentially in the third quarter.
At 13:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was neutral at 46.8483, while the FxWirePro's Hourly Strength Index of US Dollar was bearish at 25.5788. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
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