In Australia, business inventories rose by 0.1% for the fourth quarter of 2024, surpassing expectations of no change. This figure follows a decline of 0.9% in the previous quarter.
Operating profit increased by 5.9% quarter-on-quarter, significantly higher than the anticipated 1.8% after a prior decrease of 4.6%. The positive inventory data suggests a potentially stronger GDP outcome for the fourth quarter, with results set to be released on Wednesday.
Stock levels in Australia edged slightly higher, defying expectations of stagnation. Although modest, this shift points to a possible stabilisation after the contraction from the prior period. When businesses hold more stock, it often reflects either increased demand or preparations for stronger sales ahead.
Meanwhile, company earnings posted a robust rebound, extending well beyond analysts’ forecasts. A 5.9% surge in profits suggests that businesses managed to recoup losses from the previous decline far more quickly than expected. This upswing introduces a fresh dynamic to growth projections, especially with upcoming GDP figures expected mid-week.
For those active in the market, these shifts change the equation. An uptick in inventories, paired with stronger-than-expected earnings, implies that businesses may be in a stronger position than feared. If the GDP figures align with these developments, broader market sentiment could shift accordingly.
We must also keep in mind that prior inventory contractions had pointed to underlying weakness. The reversal of that trend raises questions about whether this improvement is sustainable or simply a correction after an overly sharp decline. Either way, this will shape expectations for the months ahead.
With this new data, previous assumptions regarding economic momentum may no longer hold. Adjustments will need to be made as the full picture becomes clearer in the days to come.
