From Westpac:
The Business Indicators survey provides an estimate of business inventories and a partial update on incomes.
The survey was more positive than we anticipated, particularly around incomes.
Inventory levels were little changed in the quarter, +0.1%, vs Westpac f/c -0.5%.
This broadly flat result was despite a decline in imports, which pointed to the risk of an inventory rundown.
Inventories will be neutral for Q3 GDP, (vs Westpac f/c -0.2ppts).Company profits rose 1.3% in the September quarter. That was broadly in line with market expectations but stronger than we expected (market median +1.0% and Westpac -1.0%)
Mining profits were the surprise, up 6%, despite the slump in global commodity prices. We anticipated a flat result, with lower global prices offset by a lower AUD.
Profits across the broader economy were little changed in aggregate, meeting our expectations.
Note, that on an adjusted basis (to be more consistent with the national accounts measure), profits rose 2.4% vs Westpac f/c flat.
Wages and salaries (i.e. the wages bill) made a moderate gain in Q3, up 1.0%, a little above our expectation of 0.8%. Note that employment levels and hours worked have made solid gains of late, with strength in home building activity and the service sectors. Although, most hourly wage measures remain weak, reflecting a number of negatives at present.
Implications for Q3 GDP
Our forecast for Q3 GDP is 0.7%qtr, 2.1%yr.
The risks to our forecast are materially to the upside, in the wake of the Business Indicators survey.
Tomorrow, net exports and public demand data will be released, following which we will review our GDP forecast.
This is ahead of the National Accounts on Wednesday. For further detail, see our GDP preview bulletin of last Friday.
