Manufacturing and retail have suffered in recent years from a high Australian dollar that was consistently above US100c. Photo / AP
Manufacturing and retail have suffered in recent years from a high Australian dollar that was consistently above US100c. Photo / AP
Australian company profits have ticked higher, thanks to healthier returns from the battered and bruised retail and manufacturing sectors.
The surprise 0.5 per cent rise for the September quarter defied economists' expectations of a 1.3 per cent fall, Australian Bureau of Statistics figures showed yesterday.
The rise, while modest, representeda recovery from a 7.5 per cent slide in the previous three-month period. Helping was a 9.4 per cent lift in manufacturing gross operating profits, and a 2.3 per cent rise for retailers, their best results in a year.
St George senior economist Janu Chan said the lifts in profits posted by those two sectors helped offset a 5 per cent decline in mining profits, which were particularly hurt by 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."
Manufacturing and retail have suffered in recent years from a high Australian dollar that was consistently above US100c.
However, the currency began dropping in May 2013, and is now trading a little below US85c.
Economists are confident that the dollar's fall will help retail and manufacturing continue to bounce back, by making locally produced goods more competitive with dearer imports.
Australian Industry Group chief executive Innes Willox said the lower dollar, lower energy costs and moderate wages growth were underpinning the manufacturing sector.
JP Morgan economist Tom Kennedy said the rise in company profits was surprising given the recent fall in the prices of mining exports.
CommSec chief economist Craig James said the rise in profits should mean a strong result for September quarter economic growth.
"The latest results on sales, profits and inventories confirm the economy is in good, rather than great shape," he said.
