REPEAT: MNI: Australia Q3 Inventories Rise Upside GDP Risk

Repeats Story Initially Transmitted at 00:57 GMT Dec 4/19:57 EST Dec 3

--Company Profits Decline Slightly

     SYDNEY (MNI) - Business inventories rose more than expected in the third

quarter and could add around 0.3 percentage point to Q3 GDP, but company profits

disappointed with a slightly decline.

     Data published by the Australian Bureau of Statistics Monday showed

business inventories rose 0.2% q/q in Q3 following a revised 0.5% decline (from

-0.4%) in Q2. The data also showed company gross operating profits fell 0.2% q/q

after a revised 3.3% fall in Q2.

     The 0.2% rise in inventories was largely due to a 0.3% increase in

wholesale stocks, which rebounded from a 1.6% fall in Q2. Manufacturing

inventories also contributed with a 2.0% q/q rise, marking two straight

quarterly gains, while retail trade inventories rose 0.1%. These gains were

partly offset by a 5.1% q/q fall in mining inventories.

     The overall inventories rise was slightly above expected, with the median

of an MNI survey calling for a flat reading in Q3. 

     The larger-than-expected inventory rise could lead to small upward

revisions in some economists' forecast for Q3 GDP, though it is likely they will

wait until balance of payments and government spending data on Tuesday to

finalize their forecasts. MNI survey median forecast for Q3 GDP growth currently

stands at +0.7% q/q and +3.0% y/y, with the y/y acceleration driven largely by a

low base effect.

     Company gross operating profits fell in Q3 for the second straight quarter,

with the trend turning negative for the first time in five quarters. In the

latest quarter the fall was driven mainly by mining, manufacturing, as well as

rental and hiring sector profits, which were mostly offset by rise in profits in

the information and media, as well as wholesale, retail and transport sectors.

     Mining profits fell 3.3% q/q, the second consecutive quarterly decline.

Manufacturing profits fell 6.4%, the first fall in four quarters. 

     Wages and salaries rose 1.1% q/q in Q3, the third straight quarterly gain,

with the trend accelerating to +1.2% in Q3 from +1.0% in Q2. Wages were driven

higher mainly by a 0.8% rise in manufacturing, a 3.0% increase in construction

and a 2.6% rise in professional, scientific and technical services. 

     From Business Indicators data for the third quarter published by the

Australian Bureau of Statistics on Monday:

                                                 Q3                        Q2

-----------------------------------------------------------------------------

                                       %Change, Q/Q              %Change, Q/Q

Inventories                                    +0.2  -0.5 (revised from -0.4)

MNI Median                 0.0 (Range -0.4 to +1.0)

Company Operating Profits                      -0.2   -3.3(revised from -4.5)

MNI Median                 0.0 (Range -3.0 to +2.5)

Wages and Salaries                            +1.1%                     +1.7%

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

[TOPICS: MTABLE]