The chances of a slide in the economy in the March quarter increased yesterday.
The picture for the GDP data will be further fleshed out today with the current account figures and the government finance figures.
The current account data will show the impact of the floods on the trade account through cuts in coal exports in particular, plus a smaller fall in iron ore volumes (although higher prices will have offset some of that).
In all the stories it’s the same factor, the flooding in Queensland and Victoria at the start of the year.
They damaged company profits in the March quarter, especially in mining.
Company gross operating profits fell 2% in the March quarter, to $63.53 billion, according to quarterly data from the Australian Bureau of Statistics out yesterday.
The market had been expecting a 1.8% rise on quarter.
(Gross operating profit measures earnings before tax, interest, depreciation and amortisation. It excludes asset sales and foreign-exchange gains or losses.)
The influence of the performance of the mining sector in the quarter can be seen from the ABS breakdown in yesterday’s release.
The ABS said that mining profits fell 6.5%, seasonally adjusted, in the quarter and this was the biggest reason for the overall fall.
The ABS said mining sales fell 6%, seasonally adjusted, while inventories rose 1%.
A 3.9% rise in the seasonally adjusted estimate for wages and salaries in the mining sector stood out in the quarter.
By way of contrast the ABS said company gross operating profits were up 7.5% for the manufacturing sector in the quarter, with wages and salaries were up 1.4%, seasonally adjusted. Inventories fell 0.6%.
In water, waste service, gas and electricity, the ABS said company gross operating profits, seasonally adjusted fell 7.0%, while wages and salaries rose 4.7%, seasonally adjusted. Inventories were up 33.8%.
Profits at wholesalers rose 11.6%.
Overall estimated business inventories, in seasonally adjusted chain volume terms, rose 0.4% in the March quarter, half the 0.8% rise in the December quarter.
Economists say the smaller rise in estimates for business inventories suggest a drag in growth.
Economists were expecting inventories to have risen by 0.1% in the quarter.
The ABS said the estimated income from sales by manufacturers in the March quarter, in seasonally adjusted chain volume measures, was down 0.7%, but the estimated income from sales by wholesalers was up 1.3%.
Offsetting some the weakness in profits, the seasonally adjusted estimate for wages and salaries rose 1.4% in the quarter.
And other figures yesterday showed that new home sales grew at the slowest pace this year in April.
The Housing Industry Association/ JELD-WEN survey showed a 0.2% rise in new home sales in the month, down sharply from the 4.3% rate in March.
New house sales slumped more than 10% in WA, were down 1.5% in Qld and were down half a per cent in South Australia.
They rose 7.8% in NSW and 2.2% in Victoria.
