Corporate Australia is chugging along very nicely, according to the March quarter business indicators from the Australian Bureau of Statistics.
And, judging by the figures, the national accounts for the March quarter tomorrow are likely to show a well-balanced economy with moderate but solid growth; inflation a touch higher thanthe Reserve Bank would want, but under control, and no real impediments to a continuation of this picture.
The Business indicators showed that company profits rose at the fastest pace in almost two years in the first quarter as earnings climbed at banks, retailers and a host of companies in the service sector, especially mining services.
The ABS said gross operating profits increased 7.6 per cent from the fourth quarter whichrose a revised three per cent increase. Profits were up 17.1 per cent from the March, 2006 quarter.
But that's because a privatised Telstra was included as a private company in the figures on the quarter.
Inventories held by businesses rose 1.4 per cent in the first quarter but fell 0.5 per cent compared to the March, 2006 quarter.
The ABS measures gross operating profit as earnings before tax, interest, depreciation and amortization. It excludes asset sales and foreign exchange gains or losses.
The ABSreminded users that the privatisation of Telstra had an impact here, just as it did in last week's New Private Sector capex figures.
"To assist users of these statistics the seasonally adjusted movements for March quarter 2007, if Telstra Corporation had also been included in the December quarter 2006 data would have been as follows: Total company gross operating profits (up) 2.1%; Total wages and salaries (up) 2.4%."
So on a strictly comparable basis the inclusion of Telstra in the latest figures as a privatised corporation produced a sharper than expected rise in gross profits and wages which were up 3.4% for the quarter and 10.2% for the year to March.
The ABS said:" In current price terms, the seasonally adjusted estimate for company gross operating profits increased 7.6% in the March quarter 2007. "
Falls in Mining, Wholesale and Construction were offset by increases in the other industries. In current price terms, the seasonally adjusted estimate for wages and salaries increased 3.4% this quarter.
According to the ABS's figures, earnings of transport companies climbed 9.8 per cent in the quarter, profits at retailers gained 5.5 per cent and manufacturers' earnings rose 4.1 per cent, while for property and business services, the seasonally adjusted estimate of profits increased 3.5%, the growth rate slowing in comparison to the previous three quarters
The ABS said that for mining the seasonally adjusted estimate of gross operating profits fell 1.5%, the third consecutive quarter of falls.
In current price terms, the trend estimate for wages and salaries in mining increased 3.0% this quarter. The seasonally adjusted estimate increased 2.5%, following an increase of 3.4% in the previous quarter.
The Australian economy grew one per cent in the December quarter and a similar growth figure is expected in the national accounts tomorrow.
