Australian data
Q3 Inventories +0.8% q/q ... a beat on expectations and will add to GDP for Q3
- expected +0.3%, prior +0.3%
Company profit +1.0% q/q ... MISS
- expected +3.0%, prior 6.9%
Westpac comments on the data (bolding mine):
- Inventory levels increased by a relatively solid 0.8% ... will see inventories add 0.2ppts to Q3 GDP growth
- We suspect that some of this inventory run-up, which was centred on wholesale and to a lesser extent retail, was unintentional. This was against the backdrop of patchy demand.
- Profits across the broader economy were mixed ... adding to the evidence that conditions were soggy around mid-year
- Wages and salaries increased by a moderate 1.2% in the quarter but grew by only 2.9% over the year. Hours worked rebounded in the quarter, reversing the Q2 dip, supportive of wage incomes
- Small business profits surprised to the downside
- Our forecast for Q3 GDP remains 0.2%qtr, 2.4%yr. We interpret today's results as reducing some of the downside risks surrounding our central case forecast.
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A very mixed bag from this report. Yes, it will boost Q3 GDp ... but the boost from inventory is, says WPAC "unintentional. This was against the backdrop of patchy demand". Not really too much of a positive that.
Wages was a bit better, though, modest growth but growth nonetheless, and should provide some support for private consumption.
