Company profits rise 1.8 per cent, but mining did all the work

By Elias Thorne · 2026-09-01

Update, 2 September: the ABS reported this morning that GDP grew 0.4 per cent in the June quarter, above the 0.3 per cent most forecasters expected.^[5] The analysis below was published before the release.

The headline number and the one underneath it

Company gross operating profits rose 1.8 per cent in the June quarter, the ABS reported on Monday.^[1] Wages and salaries grew 1.4 per cent over the same period.^[1] On their own, both read as good news for Wednesday's national accounts.

The figure underneath is weaker. Mining profits rebounded 6.8 per cent after a 9.4 per cent fall in the March quarter, according to Westpac's reading of the release.^[4] Outside mining, profits fell 1.1 per cent.^[4] Take out the miners and Australian business went backwards.

Inventory prices flattered the total as well. The survey counts changes in the value of stock as profit, and that adjustment added $3.7 billion in the June quarter, up from $2.4 billion in March.^[4] Westpac calculates that once it is stripped out, the comparable national accounts measure is closer to 1.4 per cent than 1.8.^[4]

What the inventory rundown does to Wednesday

Inventories fell 0.2 per cent in the quarter in volume terms.^[1] When businesses run down stock, the national accounts count it as a subtraction from GDP. A build-up would add to it.

Westpac senior economist Pat Bustamante said the result had changed his team's arithmetic. Inventories were now expected to take 0.1 percentage points off June-quarter growth, rather than contributing nothing.^[2] He said the Business Indicators release had supplied the last inputs needed before the national accounts.^[4]

Where the forecasts sit

Westpac's September update puts June-quarter GDP growth at 0.3 per cent, and 1.8 per cent over the year.^[2] That annual figure is a tenth of a point below the Reserve Bank's own projection. The RBA's August Statement on Monetary Policy forecast 1.9 per cent growth through the year to June.^[3]

A tenth of a point is not a crisis on its own. The RBA's outlook, though, already rests on services inflation staying high. Soft activity data leaves the board less room to hold rates without appearing to lean into weakness. Wednesday's print, measured against Westpac's 0.3 per cent, decides how much room is left.^[2]

Elias Thorne

Elias Thorne writes about interest rates, the bond market and the Reserve Bank. He is interested in what monetary policy actually does to household budgets, and in the long stretches of economic history that tend to repeat.