Anyone expecting a clearer picture of the health of the Australian economy to emerge from today’s data flow (and for the rest of the week for that matter), will be disappointed.
It is contradictory, suggesting sluggish demand, poor profits and weak wages growth, allied with housing being the only “hot” spot in lending as business credit remains weak. But even in these figures, there was a surprisingly mixed message with mining profits down sharply in seasonally adjusted terms, but manufacturing profits rose in the quarter.
For the Reserve Bank board meeting tomorrow, the figures will merely confirm that the economy isn’t out of the woods, and while a firmer statement on a switch in monetary policy is on the cards, the central bank is likely to wait a while longer than some in the market expect before putting up rates.
It seems the stockmarket and business and consumer confidence are ahead of the real situation in the economy:
3.4%: the fall the ABS reported today in business inventories for the June quarter, 1.1% was the fall in sales by manufacturers of sales and goods, but there was a solid 2.9% jump in sales by wholesalers.
1.1%: the drop in wages and salaries, in seasonally adjusted terms.
7.8% was the fall in company gross operating profits (which are worked out differently to normal profits) in the June quarter from the three months to March, something the recent June 30 reports have confirmed. The market had been expecting profits to be down 4.5%, so the outcome again is worse than expected by the market.
24.7% was the fall in mining industry gross profits, according to the ABS, (as was to be expected given the impact of the credit crunch and the recession). The seasonally adjusted estimate for wages and salaries was 5.3% this quarter.
5.9% was the rise in manufacturing’s estimated gross company profits (seasonally adjusted) in the June quarter, while wages and salaries (seasonally adjusted) fell 2.3% this quarter.
6.1% was the fall in the construction sector’s seasonally adjusted estimate for profits fell 6.1% after a rise of 8.5% in the March quarter, wages and salaries (seasonally adjusted) rose 1.5% in the June quarter.
12.6% was the estimated slump in wholesalers seasonally adjusted profits, while sales were up (and inventories down). The seasonally adjusted estimate for wages and salaries fell 1.8%.
Flat: the headline inflation reading from the TD Securities/Melbourne Institute inflation gauge after the sharper-than-expected 0.9% rise in July. That put the annual inflation estimate at 1.7% (1.9% in July).
0.2% was the fall in core inflation estimate (which excludes volatile items such as petrol and fruit and vegetables) in August, compared with the 1% rise in July and pushed the annual rate down to 2.6% from 3%.
0.2% was the size of the fall in total lending reported today by the RBA in July over June, compared with the 0.1% rise in June over May. The Reserve Bank said total credit rose 3% in the year to July, slower than annual rate of 3.4% in the year to June.
06% was the rise in housing credit in the month for the second successive month. That left the annual increase at a very solid 7.3%. the RBA commented that lending in July was mostly to owner occupiers with only weak growth in loans to investors. “Other personal credit declined by 0.2 per cent over July, following a fall of 0.3 per cent over June. Over the year to July, other personal credit fell by 6.4 per cent, reflecting a large decline in margin lending,” the RBA said. the fall was mainly due to lower margin lending.
0.3% was the size of the “fall in business credit in July, following a fall of 0.6% over June. Over the year to July, business credit declined by 0.7%.” the RBA reported this morning.
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