Home > Manufacturing, retail lift overall company profits

Manufacturing, retail lift overall company profits

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Company profits have recorded an unexpected increase for the September quarter, as a result of good returns from the manufacturing and retail sectors.

As AAP reports, Australian Bureau of Statistics (ABS) figures show that profits rose by just 0.5 per cent in the quarter, even though economists were expecting them to drop by 1.3 per cent.

The embattled manufacturing sector experienced a 9.4 per cent increase in gross operating profits and retail profits increased by 2.3 per cent.

In contrast, there was a 7.5 per cent fall in company profits in the previous quarter.

According to St George senior economist Janu Chan, there was a five per cent decline in mining profits, largely because of falls in iron ore prices.

"With recent declines in commodity prices, the outlook for profits in the mining sector during the December quarter is likely to be grim unless there is a further ramp up in output volumes or the Australian dollar declines sharply," she said.

Both manufacturing and retail are enjoying the benefits of a lower Australian dollar. In recent years, the Aussie dollar has been up around parity with the US dollar. However, it has since dropped.

Yesterday it hit a four-year low of 84.38 US cents, though today it has bounced back to 85.09 US cents.

Australian Industry Group (Ai Group) chief executive Innes Willox said that, apart from the lower dollar, manufacturing is being helped by easing in energy costs and moderate wages growth.

There was another little bit of good news for manufacturing yesterday. The Ai Group purchasing Managers Index (PMI) for November was 50.1, meaning that Australian manufacturing expanded during the month. Figures above 50 represent expansion so the growth was only slight.

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