Gulf between profits and wages widens to grand canyon

Monday’s June quarter Business Indicators release from the ABS, which feeds into today’s national accounts, showed that wages & salaries remain wildly divergent from business profits.

As shown in the next chart, real business gross operating profits continued to boom in the year to June:

Whereas, there remained a huge gulf between wages & salaries:

In the year to June 2019, real per capita business profits rose by 6.4%, whereas salaries & wages rose by 1.4%:

The recent surge in real business gross operating profits was driven by the rebound in commodity prices and the terms-of-trade:

Sadly, the transmission mechanism from mining profits to wages is broken because investment has stalled.

The national accounts will be released later this morning which will record the average compensation of employees. March quarter’s release posted ongoing weak growth, so it will be interesting to see whether there is much improvement in the June quarter.

Comments are hidden for Membership Subscribers only.