Company profits slid 7.2 per cent in the March quarter after sliding 8 per cent in the December quarter in the worst set of back-to-back results since records began in the mid-1990s. Manufacturing firms were the hardest hit, suffering an unprecedented 24.5 per cent collapse in profits on top of a collapse of 18 per cent.
The results make it almost certain that the Australian economy will be found to have shrunk for two consecutive quarters when the official figures are released tomorrow, (WED) meaning that Australia will be in a recession, as commonly described.
Paradoxically the Australian dollar soared to an eight-month high late yesterday moving past 80 US cents and then past 81 cents in Melbourne trade on a growing feeling that the recession would be short.
Other figures showed the two direct targets of the government's first two stimulus packages performing exceptionally well with retail spending climbing to a new all-time high and new home sales improving for the forth consecutive month...
Retail spending climbed a further 0.3 per cent in April on top of a jump of 2.2 per cent in March with household good sales jumping almost 4 per cent, in part because of climbing new home sales.April sales were up 22 per cent on their low point in December as buyers rushed in to take advantage of the extended First Home Buyers Grants.
"Had we not acted as quickly as we did we would not be seeing these sorts of figures," Treasurer Wayne Swan told parliament.
But Australian voters appear unimpressed, marking Labor down as an economic manager as the Opposition hammers the theme of government debt.
The latest Essential Media poll shows the proportion of Australians regarding Labor as the best economic manager slipping from 34 per cent to 26 per cent, while the proportion regarding the Coalition as superior remains roughly steady at 34 per cent.
Labor retains its position as the preferred party for protecting wages and jobs and for "helping ordinary working people".
But the Coalition is clearly regarded as superior to Labor when it comes to managing debt polling more than double Labor's 18 per cent with 40 per cent.
In parliament Prime Minister Rudd poured scorn on the Coalition's new television advertisements about debt noting that they acknowledged the role of the international economic crisis not at all.
The Reserve Bank board is expected to keep official interest rates steady when it meets this morning, (TUES) with the briefing sent out to members noting that several variables are moving in the right direction.
Australia's Performance of Manufacturing index rose by a record 7.4 points in May, hitting a 7-month high while the equivalent gauge in China hit a 10-month high.
"The Australian news on profits and sales tells us where the economy has gone, not where it is headed," wrote CommSec economist Craig James in a note to clients. "The Reserve Bank has no need to cut interest rates, and hopefully the last rate cut has been seen this cycle.
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