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Profit, Inventory Data May Be Tentative Sign Of Weakening Demand

AUSTRALIA DATA

Q3 company profits fell 12.4% q/q to be up by 8.5% y/y, this followed 6 consecutive quarters of increases. Inventory volumes rose for the fourth consecutive quarter by 1.7% q/q to be up 7.9% y/y, this is likely to make a positive contribution to Wednesday’s Q3 GDP outcome.

  • Companies’ wage bill for Q3 rose 2.9% q/q to be 11% higher on the year, as employment continued to rise, and wage rates, including the boost to the minimum pay, also increased.
  • Higher inventories are likely due to supply chain issues beginning to resolve and precautionary stocking given those issues. They may also signal some tentative signs of moderating demand, sales were down in a number of industries, but Q3 may be too early to tell.
  • The mining sector saw particular weakness with operating profits falling 19.1% q/q but wages rising 3.5%. Sales volumes were +2% q/q and inventories rose 10.7%.

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