by Angus Nicholson,IG
Earnings and NGDP
With 178 companies now having reported, earnings were 15.5% below where the market was expecting them. Energy was the only sector to see a major upside earnings surprise, 17.9% above consensus, with materials also having a minor positive surprise. Otherwise, it was a very dismal performance. But Australia finds itself in a very weak nominal growth (NGDP) environment, and, as the chart below shows, it is difficult to see much of an earnings recovery until we similarly see a recovery in nominal growth.