Today’s release of the ABS’s measure of company profits was weaker than expected at 1.7% for Q4.
But that’s not a bad result, all things considered, and it will certainly add to Q4 GDP to be released this week.
But the internals to the data show just how bifurcated the Australian economy remains, and how desperately we are still clinging to mining-generate growth.
The Commonwealth Bank’s economic team summarised the data saying: “A large (11%) rise in mining profits was behind the headline rise in profits. Excluding mining, profits actually fell by 1.3%.”
Perhaps the 5.1% rise in the ANZ Job ads series –which was also released this morning — might be a lead indicator that the economy is picking up.
But the ABS data showed wages growth of just 2.8% year on year. Even though company profits rose 10.7% year on year, a solid result — and the best since December 2010 — the fact mining is back near its all-time highs, while the rest of the company sectors are lagging is disappointing.
This suggests that the economic adjustment process the RBA wants, and the Australian economy needs is still struggling to take hold.