Sept. 3 (Bloomberg) -- Australian business profits unexpectedly dropped in the three months through June, the third straight quarterly decline, as earnings weakened in mining, manufacturing and retailing.
Gross operating profits fell 0.7 percent from the first three months of this year, when they slid a revised 3.7 percent, the Bureau of Statistics said in Sydney today. The result compares with the median forecast for a 1 percent gain in a Bloomberg survey of 18 economists. Inventories rose 0.6 percent. Economists had forecast a 0.2 percent gain.
Reserve Bank of Australia Governor Glenn Stevens will keep the benchmark interest rate unchanged at 3.5 percent tomorrow, according to all 24 economists surveyed by Bloomberg News. The nation’s currency has remained elevated even as prices for Australian raw-materials exports that generate wealth and power the economy have declined.
“Australia’s terms of trade are expected to have declined in the June quarter and weighed on company profits, which have tracked the terms of trade lower in recent quarters,” Justin Fabo, a senior economist at Australia & New Zealand Banking Group Ltd., said in a research report before today’s release.
Resource investment to meet Chinese demand and foreign investment funds seeking a haven have spurred gains in the nation’s currency, which closed above parity with the U.S. dollar for all but 23 days this year, remaining stronger than the average 75 U.S. cents since the currency was freely floated in December 1983.
The so-called Aussie traded near a five-week low today, buying $1.0247 at 11:47 a.m. in Sydney.
From a year earlier, profits declined 6.5 percent, today’s report showed.
Profits at mining companies fell 1 percent in the second quarter, manufacturers dropped 8 percent and retail declined 3.8 percent, according to today’s report. Profits at construction companies rose 6.6 percent, the report showed.
Gross operating profit measures earnings before tax, interest, depreciation and amortization. It excludes asset sales and foreign-exchange gains or losses.
Prices for Australian raw-materials exports slid in July to the lowest since 2010, and the commodity price index has fallen 10.8 percent over the past year, the RBA said last month.
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