Business Indicators — Q2 | By the numbers
- Company gross operating profits increased by +2.0%q/q, which exceeded the market forecast for +1.3%. Annual growth strengthened to +11.4% (prior +6.1%)
- Wages and salaries lifted +1.2%q/q (prior +0.9%), though, annual growth eased to +4.5% from +4.9%.
- Inventories lifted 0.6%q/q vs the market forecast for +0.2% (prior revised +0.8%)
Business Indicators — Q2 | The details
Company profits have been trending up for the past couple of years and that remains in place with overall growth of +2% in Q2 to be running at +11.2%Y/Y.
This continues to be led by the mining sector where profits increased another +4.4% in the quarter, while annual growth is nearly 22%. Stronger commodity prices over the past couple of years have driven a surge in profits in the order of 91% since mid-2016.
Profit growth in the non-mining sectors was more moderate at +0.6%q/q and +6.2%Y/Y. Over the past year, profits have been supported by manufacturing (+8.3%) and wholesale trade (+16.9%), while strong rises in power prices have lifted the utilities sector (+15.7%).
Growth in wages and salaries has been firm in recent quarters, which reflects a solid rate of employment growth — this has softened of late — and a lift in hours worked. Annual growth in the total wages bill of +4.5% is around half the level it was pre-GFC.
The increase in inventories was broad-based in the quarter with; mining +0.9%, manufacturing +0.2%, electricity, gas, water and waste services +3.3%, wholesale trade +1.1% and accommodation and food services +1.1%. Retail inventories, though, were flat.
Business Indicators — Q2 | Insights
The income measures in these data were solid, particularly for company profits, while growth in wages and salaries are broadly similar to recent quarters. For inventories, the increase this quarter was smaller than in Q1, implying a small subtraction (potentially around -0.1ppt) from overall growth in Q2.