May 31, 2011 – According to the Australian Bureau of Statistics (ABS), a drop of 2.0 per cent in the company gross operating profits was being seen in the March quarter, which is said to be the third following the two consecutive quarterly.
Generally in order with market expectations, the latest data on the gross operating profits in current prices and seasonally adjusted terms has showed an increase of 9.5 per cent over the year. This is mainly due to the 16.7 per cent rise seen in the June 2010 quarter.
Benjamin Dinte, an associate economist of the Macquarie Group, said that the latest data was generally expected.
The downfall of company profits is mainly attributed to the floods that occurred in Queensland and Victoria that have cut company profits.
The main hindrance on the home builders’ company profits in the March quarter was the flooding on the east coast over the summer.
These floods have resulted to a rise in inventories, making economists comment that the economy may have contracted in the March quarter.
In terms of company profits, Mr. Dinte said that in spite of rising commodity prices, a fall still happened because of the weak sales volumes across the board.
Overall, the floods have greatly impacted the numbers and sales growth of house builders in the quarter, across a variety of sectors.
A rise of 0.4 per cent in the March quarter of the estimated business inventories, in seasonally adjusted chain volume terms was seen after seeing an increase of 0.8 per cent in the December quarter.
However, the estimated inventories didn’t increase by as much as economists were expecting it to increase by 0.1 per cent in the March quarter.
Ben Jarman, a JP Morgan economist, is anticipating that the economy will shrink by 0.4 per cent in the quarter.
Mr. Jarman explained that everyone is expecting that the GDP number will be in the red – negative growth.
RBC Capital Markets fixed income and currency strategist, Michael Turner, said that he was was expecting a decline in GDP in the quarter by 0.5 per cent which he ascribed largely to disruptions in coal production.RBC Capital Markets fixed income and currency strategist, Michael Turner, said that he was was expecting a decline in GDP in the quarter by 0.5 per cent which he ascribed largely to disruptions in coal production.
