Salary Surge Weighs on Declining Business Profits

Two lines on a graph, one in red, rising, representing the rise in wages. One line in blue, falling, representing profits. A magnifying glass focuses on the red line, highlighting the rise of salaries and wages.

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The Australian Bureau of Statistics report indicates a trend of rising wages alongside declining company profits. In the first quarter of 2024, company gross profits dropped by 2.5%, following a decline of 0.7% in December 2023. On the other hand, wages and salaries increased by 0.6% during the same period.

Declining Company Gross Profits vs. Rising Salaries

Table 1

After accounting for seasonal changes between December 2023 and March 2024, companies’ gross operating profits decreased by 2.5%. At the same time, wages and salaries increased by 0.6%.

Looking at a longer period, from March 2023 to March 2024, the profit decline was more significant, at -8.6%. However, during this time, wages and salaries increased significantly, rising by 6.6%.

Overall Assessment of Company Gross Operating Profits versus Wages and Salaries Per Industry

ServicesSeasonally Adjusted Meaning Wages and SalariesSeasonally Adjusted CGOP
Manufacturing1.90% ↑ 2.10% ↑
Construction-1.50% ↓ -1.20% ↓
Retail-0.80% ↓ -0.50% ↓
Accomodation and Food2.30% ↑ 2.40% ↑
Professional, Scientific, and Technical Services1.70% ↑ 1.80% ↑
Mining1.10% ↑ -6.10% ↓

An overview of seasonally adjusted wages and salaries and company gross operating profits (CGOP) between December 2023 and March 2024

Manufacturing

In the manufacturing sector, the March 2024 quarter saw an upward trend in company gross operating profits (CGOP) and wages and salaries.
Year Month Seasonally adjusted Wages ($m) Seasonally adjusted CGOP ($m)
Mar 2021 14,140 9,483
Jun 2021 14,285 9,457
Sep 2021 14,170 10,128
Dec 2021 14,392 12,699
Mar 2022 14,564 11,214
Jun 2022 15,138 12,758
Sep 2022 15,271 10,015
Dec 2022 15,337 11,407
Mar 2023 15,511 12,002
Jun 2023 15,627 11,237
Sep 2023 16,008 11,524
Dec 2023 16,160 11,616
Mar 2024 16,464 11,864

Manufacturing in Chain Volume Measures

In the manufacturing sector, sales declined in March 2024, dropping to $100,789 million from $101,831 million in December 2023 (-1.0%). Inventories slightly increased to $58,373 million in March 2024 from $58,072 million in December 2023 (0.5%).  

Year Month Seasonally adjusted Sales ($m) Seasonally adjusted Inventories   ($m)
Mar 2021 102,819 52,576
Jun 2021 103,527 53,102
Sep 2021 102,658 53,035
Dec 2021 103,897 54,046
Mar 2022 102,332 56,280
Jun 2022 102,735 58,137
Sep 2022 101,305 57,981
Dec 2022 100,316 58,617
Mar 2023 103,353 58,322
Jun 2023 100,865 58,379
Sep 2023 101,053 58,669
Dec 2023 101,831 58,072
Mar 2024 100,789 58,373

Construction

In the construction sector, seasonally adjusted wages decreased to $20,276 million in March 2024 from $20,404 million in December 2023 (-0.6%). Similarly, CGOP fell to $7,816 million in March 2024 from $7,913 million in December 2023 (-1.2%). This did not follow the usual trend of low gross operating profits and high salaries.

Year Month Seasonally adjusted Wages ($m) Seasonally adjusted CGOP ($m)
Mar 2021 15,271 6,984
Jun 2021 15,756 6,118
Sep 2021 15,722 6,745
Dec 2021 16,092 7,082
Mar 2022 16,711 7,334
Jun 2022 17,408 6,858
Sep 2022 18,012 6,494
Dec 2022 18,806 6,894
Mar 2023 19,266 7,300
Jun 2023 19,806 7,435
Sep 2023 19,981 8,018
Dec 2023 20,404 7,913
Mar 2024 20,276 7,816

Construction in Chain Volume Measures

The construction sector saw a decline in sales during the March 2024 quarter, dropping to $95,040 million from $97,442 million in December 2023 (-2.5%). In contrast, the December 2023 quarter showed increased sales, rising to $97,442 million from $94,486 million in March 2023 (3.1%).

Year Month Seasonally adjusted Sales ($m)
Mar 2021 93,881
Jun 2021 96,580
Sep 2021 95,250
Dec 2021 95,177
Mar 2022 96,752
Jun 2022 96,933
Sep 2022 95,602
Dec 2022 95,457
Mar 2023 94,986
Jun 2023 96,353
Sep 2023 97,112
Dec 2023 97,442
Mar 2024 95,040

Retail Trade

In the retail trade sector, seasonally adjusted wages for the March 2024 quarter decreased slightly to $14,014 million, down from $14,059 million in December 2023 (-0.3%). Company gross operating profits (CGOP) also saw a minor decline, with $6,856 million reported in the March 2024 quarter compared to $6,919 million in the December 2023 quarter (-0.9%). This did not follow the usual trend of low gross operating profits and high salaries.

Year Month Seasonally adjusted Wages ($m) Seasonally adjusted CGOP ($m)
Mar 2021 11,749 6,082
Jun 2021 12,258 5,526
Sep 2021 11,608 5,441
Dec 2021 11,759 5,722
Mar 2022 11,994 6,877
Jun 2022 12,509 6,310
Sep 2022 12,903 6,080
Dec 2022 13,344 6,821
Mar 2023 13,501 6,784
Jun 2023 13,786 7,009
Sep 2023 13,931 7,640
Dec 2023 14,059 6,919
Mar 2024 14,014 6,856

Retail Trade in Chain Volume Measures

In the March 2024 quarter, the retail trade sector saw sales of goods and services increase to $127,000 million  from $126,660 million in the December 2023 quarter (0.3%). Inventories also grew from $42,673 million in December 2023 to $43,704 million in March 2024 (2.4%)

Year Month Seasonally adjusted Sales ($m) Seasonally adjusted Inventories ($m)
Mar 2021 120,298 41,169
Jun 2021 120,826 40,801
Sep 2021 114,384 40,684
Dec 2021 121,293 40,583
Mar 2022 122,424 42,715
Jun 2022 122,695 42,634
Sep 2022 124,362 43,774
Dec 2022 124,489 43,310
Mar 2023 123,374 43,190
Jun 2023 123,735 42,817
Sep 2023 125,566 42,787
Dec 2023 126,660 42,673
Mar 2024 127,000 43,704

Accommodation and Food Services

In the accommodation and food services sector, wages increased from $7,744 million in December 2023 to $7,801 million in March 2024 (0.7%), while CGOP rose from $1,579 million to $1,595 million during the same period (1.0%).  

Year Month Seasonally adjusted Wages ($m) Seasonally adjusted CGOP ($m)
Mar 2021 5,918 1,806
Jun 2021 6,172 1,563
Sep 2021 4,667 1,324
Dec 2021 5,429 1,201
Mar 2022 5,633 681
Jun 2022 6,466 1,029
Sep 2022 6,793 1,559
Dec 2022 7,266 1,824
Mar 2023 7,416 1,571
Jun 2023 7,349 1,484
Sep 2023 7,685 1,611
Dec 2023 7,744 1,579
Mar 2024 7,801 1,595

Accommodation and Food Services in Chain Volume Measures

In the accommodation and food services sector, seasonally adjusted sales for March 2024 were $29,779 million, a decrease from $30,243 million in December 2023 (1.5%). Inventories also decreased, with the March 2024 quarter reporting $1,824 million compared to $1,917 million in the December 2023 quarter (-4.9%)

Year Month Seasonally adjusted Sales ($m) Seasonally adjusted Inventories ($m)
Mar 2021 25,861 1,551
Jun 2021 26,480 1,608
Sep 2021 19,609 1,647
Dec 2021 25,268 1,697
Mar 2022 25,763 1,751
Jun 2022 28,545 1,853
Sep 2022 28,892 1,923
Dec 2022 30,452 1,962
Mar 2023 30,698 2,135
Jun 2023 30,529 2,039
Sep 2023 30,386 1,995
Dec 2023 30,243 1,917
Mar 2024 29,779 1,824

Professional, Scientific, and Technical Services

In the Professional, Scientific, and Technical Services sector, seasonally adjusted wages and salaries increased to $25,488 million in March 2024 from $25,155 million in December 2023 (1.3%). Similarly, company gross operating profits (CGOP) increased, reaching $7,369 million in March 2024 compared to $7,126 million in December 2023 (3.4%). 

Year Month Seasonally adjusted Wages ($m) Seasonally adjusted CGOP ($m)
Mar 2021 20,287 6,272
Jun 2021 20,463 6,708
Sep 2021 20,990 7,243
Dec 2021 21,447 7,631
Mar 2022 21,753 5,287
Jun 2022 22,208 5,252
Sep 2022 22,991 5,896
Dec 2022 23,472 6,806
Mar 2023 23,900 7,321
Jun 2023 24,521 6,873
Sep 2023 24,874 6,917
Dec 2023 25,155 7,126
Mar 2024 25,488 7,369

Professional, Scientific, and Technical Services in Chain Volume Measures

In the Professional, Scientific, and Technical Services sector, the seasonally adjusted sales for the March 2024 quarter were recorded at $63,732 million, an increase from the $63,708 million reported in December 2023. Sales of goods and services stayed about the same this quarter (0.04%).

Year Month Seasonally adjusted Sales ($m)
Mar 2021 58,509
Jun 2021 58,671
Sep 2021 58,124
Dec 2021 60,702
Mar 2022 62,453
Jun 2022 62,978
Sep 2022 63,820
Dec 2022 62,864
Mar 2023 62,379
Jun 2023 62,488
Sep 2023 62,945
Dec 2023 63,708
Mar 2024 63,732

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