Profit season ramps up, all eyes on wages

The Australian company profits season will ramp up this week, with multiple firms in the retail, construction and resources spaces due to post their results.

Most eyes will be on the retail sector for signals on how consumer spending is tracking given the rising cost of living.

Then attention will turn to the Australian Bureau of Statistics, which will release a key quarterly wages growth measure on Wednesday and labour market data on Thursday.

The Wage Price Index for the second quarter is expected to have lifted by around 0.8 per cent in the three months ended June, for annual wages growth of 2.7 per cent over the 2021/22 year.

This would be in line with the forecast for annual growth of 2.6 per cent, announced in the Reserve Bank of Australia’s recent Statement on Monetary Policy, reflecting the impact of tight labour market conditions and pay rises in the first half of 2022.

But there are still concerns that pay packets, as measured by the index, aren’t likely to keep up with annual inflation, which is still tipped to hit 7.75 by the end of this calendar year.

“The tight labour market is expected to result in stronger wages growth over the period ahead, but growth in labour costs is expected to be below the rate of inflation for a time,” the RBA said earlier this month.

The latest measure of the labour market, and unemployment, will be released by the ABS on Thursday.

The July data will be watched to see if there’s any movement in the jobless rate, which declined to 3.5 per cent and its lowest level in almost 50 years in June.

The ABS is also due to release an information paper about its plans to report consumer price index results on a monthly basis, rather than quarterly, for the first time.

“This new monthly CPI Indicator will provide a timelier guide to inflation in Australia,” Australian Statistician David Gruen says.

Once the paper is published on Tuesday, the ABS will seek feedback until September 13, with a view to publishing the first monthly inflation number in October, alongside data for the September quarter.

Key retailers reporting their profits this week include JB Hi-Fi, Temple & Webster, Super Retail Group, Blackmores, carsales.com, and food companies Marley Spoon, Goodman Group and salmon producer Tassal.

Resources companies reporting include BHP, BlueScope Steel, Santos, Origin Energy, and AGL Energy.

Other notable businesses due to reveal their result include jobs platform Seek, Seven West Media, toll roads group Transurban and health insurer Medibank.

Meanwhile, the Australian stock market could edge higher on Monday when trading resumes, after Wall Street gained ground on Friday amid signs that inflation may have peaked in the US in July.

The S&P 500 rose 72.13 points, or 1.71 per cent, to end at 4279.40 points, while the Nasdaq Composite gained 265.14 points, or 2.07 per cent, to 13,045.05. The Dow Jones Industrial Average rose 418.64 points, or 1.26 per cent, to 33,755.22.

The most active Australian share price index futures contract rose 39 points to 6973 during weekend trading.

The S&P/ASX200 index on Friday finished down 38.5 points, or 0.54 per cent, at 7032.5, while the broader All Ordinaries lost 36.6 points, or 0.5 per cent, to 7288.8.