The ABS this morning released its Company Operating Profits survey for the first quarter and the news wasn’t great, -4% in the first quarter, a slight improvement from the December quarter which saw profits at -6%. Consensus was for -2.5%. The history shows how weak this is:
Company profits are a component of GDP so there’s some more pressure here on the first quarter number.
However, that will be offset by the ABS’ Inventories release which eased but still rose strongly in the quarter, up 0.9% versus 0.7% expected:
Calculating GDP is a fool’s errand but it’s probably fair to say that these two cancel one another out in some measure, which perhaps is why neither stocks nor the dollar reacted to the news. Of course, high inventories is not so good next quarter, especially if demand is undergoing some sort of shock.
