Australia's Business Indicators data were broadly reflective of a solid domestic economy in the December quarter. Sales volumes rose by 0.6% to be up by 1.2% across the back half of 2025, lifting from growth of 0.9% in the first half. Robust demand is seeing inventories decline, which fell for the second quarter in succession, and supporting rising company profits.
Ahead of the National Accounts on Wednesday, today's report on the business sector suggests that private inventories will add 0.2ppt to GDP growth in the December quarter. Strong demand is seeing inventory levels decline. But the decline in the latest quarter was a smaller 0.1% compared to 0.8% in the previous quarter, a dynamic that will add positively to GDP.
As highlighted, demand has been robust. Sales rose by 0.6% in the December quarter and 2.1% through the year. The chart below shows that sales have risen broadly across the economy in the December (green bars) and September quarters (gold bars). The only surprise was the decline in arts and recreation in the latest quarter (-1.5%) given the reporting has been that major events and concerts were well attended, but this follows several quarters of strong growth.
The domestic demand backdrop and higher commodity prices drove company profits to increase by 5.8% in the December quarter, their fastest rise in three years. On an inventory adjusted basis (a closer methodology to that used in the National Accounts), profits were up 4.8% in the quarter. Profits in the non-mining sector rose by a solid 4.4% for the quarter while the mining profits accelerated by 8.1% - the fastest growth recorded since the middle of 2022.
Wage incomes continued to rise, albeit at a slower clip of 0.9% in the December quarter. Prior to this, wages rose in excess of 1% in each of the preceding six quarters. Annual growth slowed modestly but was still running at a healthy pace (5.6%).
