Total Business Profit

IBISWorld forecasts total business profit to rise by 2.4% in 2023-24, to $580.4 billion. Inflation has boosted business profit margins due to successful price increases over input costs. The resurgence of international travel and demand post-pandemic, coupled with the Russia-Ukraine conflict, has facilitated this. Industries such as energy, logistics, manufacturing and construction have particularly benefitted, with their profit margins growing in tandem with rising prices. This is also linked to the economic slowdown in 2023-24, as businesses produced less while consumers paid more for the same basket of goods. Likewise, the escalation in total tourist visitor nights also adds to this increase for businesses in the tourism and hospitality sector. Higher realised farm income is also anticipated to boost total business profit throughout the year. However, the growth of businesses' bottom lines has started being constrained by the rise in interest rates resulting from inflation, with consumer optimism and consumption adversely affected.

Total business profit has increased over the past five years, supported by significant rises in some commodity prices, such as iron ore and steel, for a stint. In particular, access to high-grade ore, low extraction costs, and more significant economies of scale across major Australian iron ore mines have supported profitability in the Iron Ore Mining industry over the period. Additionally, free trade agreements with countries in Asia, such as China, Japan and South Korea and ongoing marketing efforts by agricultural industry associations in Asia have supported export demand for many agricultural commodities over the period. Many of these products exported, such as rock lobster, are high in value and have strong profit margins, which has boosted total business profit over the past five years.