No change in interest rates from the Reserve Bank later today, but the chances of a solid GDP figure on Wednesday may have lessened after the release of weak data on business stocks, profits and wages and salaries.
Inflation slowed again in February (dipping into the negative zone) according to the monthly survey from TD Securities, but private credit data from the Reserve Bank showed another solid month in lending to business, and a big slide in investors home lending.
Australian Bureau of Statistics data showed that company sales, profits and inventories all fell in the December quarter last year, a move which suggests that the GDP figure may be a weaker than expected 0.5%.
The Bureau of Statistics said gross corporate operating profits slipped 2.8% in the three months to December quarters, while the value of inventories dropped 0.4% (which will have a negative impact on growth).
The worse-than-expected data may force a rethink on fourth-quarter and year-on-year growth in GDP, which are expected to come in at 0.5% and 2.5% to 2.6%, respectively in tomorrow’ release from the Bureau.
Mining saw (naturally) profits drop 6.2% and retail, where they fell 6.4%.
Services, however, fared much better, reflecting the transition underway in the Australian economy, as the Reserve bank has been pointing out now for months.
The ABS said gross operating profits in travel and restaurants, rose nearly 5% seasonally adjusted, while financial and insurance services jumped 10.8%. Profits from real estate rose in the quarter as well.
January private lending data from the Reserve Bank revealed a continuation of strong business lending – up 6.2%, well ahead of the 5.5% annual rate a year ago. Total credit grew an annual 6.5% in January, up from 6.1% a year earlier. Housing loans grew 7.3%, up from 7.1%.
But investment housing continued to slow – hitting a 7.9% annual rate in January, down from 10.5% a year earlier. The monthly rate grew 0.3%, down from 0.8%.
