It’s that time of the quarter where we get the release of the partial indicators that lead to and add up to the Q2 GDP data which is out at 11.30am AEST on Wednesday.
This morning it was the turn of Business Indicators which the ABS explains “contains quarterly estimates of profits, income from the sale of goods and services, wages and salaries, and the book value of inventories”.
Here are the key takeaways from this mornings data:
Company Gross operating profits tanked 6.9% in seasonally adjusted terms last quarter after rising 0.8% in the three months to March 2014.
The pace of Wages growth moderated materially from 2.9% in Q1 2014 to just 1.1% last quarter and inventories rose 0.8% seasonally adjusted after falling 2% in the first quarter of 2014.
In terms of the sale of goods and services in manufacturing sales increase 0.5% in the June quarter up from -0.3% the quarter before while wholesale trade rose 1.2% up from 0.9%.
Of interest in the data is the big fall in mining profits which the ABS says fell 15.2% seasonally adjusted in the June quarter. This dragged the overall number down to the 6.9% headline print which of course meant that manufacturing did relatively better with a seasonally adjusted fall of just 1.3% in gross company profits.
Also of interest and when taken with the above a sign that the economic transition remains concentrated in construction, gross operating profits in this sector grew 4.7%. This is shown starkly when you compare the performance of construction companies with retail ones. Retails company gross operating profits fell 6%, seasonally adjusted.
While at first blush the data may seem disappointing – particularly the fall in gross operating profits – Sean Callow, Currency Strategist at Westpac, tweeted that he thought the “Details of Aust profits and inventories data are quite positive”, and adds it removes some downside risk from Wednesday’s GDP.
To put this in context though Westpac is only expecting 0.4% for the quarter which if reported in annualised terms as they do in the US would print just 1.6% against the 4.2% the US reported last week.
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