Australian Company Profits Rise in 1Q

By James Glynn Features Dow Jones Newswires

Australian company profits rose by 6.0% in the first quarter of 2017, from the previous quarter, the Australian Bureau of Statistics said Monday.

Continue Reading Below

That reflected a 13% increase in mining-company profits following a rebound in coal and iron-ore prices, which has since faded.

Company profits rose by 39.7% from the year-earlier quarter, it added.

Meanwhile, the value of inventories, or stocks, held by Australian companies increased by 1.2%, the ABS said.

Both numbers come ahead of the release of first quarter GDP growth data on Wednesday, with economists expecting a weak quarter as soft consumer demand and soft exports hold back activity.

Some economists are warning that the economy contracted in the first quarter. If that prediction proves correct, it will be the second negative number in three quarters.

Continue Reading Below

Cyclone Debbie, which affected Queensland in March, shutting in coal exports, before sweeping south to damp consumer activity in New South Wales, is likely to play a part in trimming growth in the quarter.

The Reserve Bank of Australia has kept interest rates on hold since August, and has indicated it expects some impact from the storm on the economy.

A negative GDP number in the first quarter might not equate immediately to heightened expectations of a near-term interest rate cut.

Still, financial markets have been pricing in more of a chance of a cut before the end of the year. That has come as consumer spending has softened, housing construction has slowed and commodity prices have retreated.

The RBA holds a policy meeting on Tuesday. Governor Philip Lowe is expected to send a message of on-hold for now.

-Write to James Glynn at james.glynn@wsj.com

(END) Dow Jones Newswires

June 04, 2017 21:49 ET (01:49 GMT)