Australian business indicators Q1 2015

The Business Indicators survey provides an estimate of business inventories and a partial update on incomes. The tone of the update for Q1 is, on balance, on the softer side.

Labour income was much weaker than expected, with a result at odds with the strength reported in the Labour Force survey, which reported a jump in hours worked of 1.8%. Arguably, given the balance of other indicators, for Q1 the Labour Force survey for appears too strong and the Business Indicators number too weak.

Wages and salaries contracted in nominal terms, declining by 0.1% in the quarter, to be only 1.4% higher than a year ago.
Company profits edged 0.2% higher, with a rise of 0.8% after adjusting for Inventory Valuation Changes.

Inventories rose by 0.4%, to add 0.5ppts to Q1 GDP growth, a little above expectations. The lift in inventories partially reverses a sharp run-down in Q4, -0.8%qtr. Of late, businesses have kept a tight lid on inventory levels given a focus on cost cutting and patchy demand.

According to Westpac the Q1 GDP is expected to grow at 0.5%qtr and 2.0%yr.