Australia: Q2 Business Indicators survey has surprises to the high side - Westpac

Andrew Hanlan, Research Analyst at Westpac, explains that Australia’s June Business Indicators survey provided some surprises to the high side.

Key Quotes

“This suggests that the risks to our Q1 GDP forecast of 0.6%qtr, 2.7%yr are tilted to the upside.”

“Company profits increased by 2.0%, exceeding expectations (market median, 1.3% and Westpac 1.0%).”

“Mining was the source of surprise, posting a 4.4% increase. This is well in excess of that suggested by commodity prices, which were little changed in the period, up 0.4% in AUD terms.”

“Non-mining profits were uninspiring in the quarter, managing a gain of 0.6%. Although, this was on the back of a strong showing in the March quarter and the profit data at the industry level is particularly volatile.”

“Nominal wage incomes (that is, wages and employment) increased by 1.2% in the quarter, a relatively robust outcome. The labour market indicators were mixed in the quarter, with hours worked up strongly, +1.1%, but employment advancing by only 0.2%.”

“Annual wage income growth edged lower to 4.5%, moderating from 4.9%. This is a clear notch below the historical average, which is 5.4%.”

“Employment growth was above par over the past year, up 2.9%, thereby providing support to household incomes. In 2018, employment growth has slowed, but is still robust, running at 1.7% annualised for the year to date.”