And now for some Aussie data

Look at profits ex Telstra
Company profits grew at a healthy 2.1% in 1Q07. What's that you say? Yesterday's headlines said company profits grew by 7.6% or an annualised rate of 17.1%. Oh silly you, you forgot to take into account the Telstra effect. For the first time Telstra's profits were recorded in the calculation distorting the numbers. Yesterday also saw the release inventories data. Inventories rose 1.4% in the quarter ahead of expectations lending strength to a solid GDP number to be reported on Wednesday.

Housing on the mend?
Today we learned that building approvals rose a much higher than expected 8.1% in April representing a 4.5% increase in the year to April 2007. Economists were expecting a rise of just 2.5%. Good news but don't get too excited yet the rise was due almost entirely to a 19.0% increase, seasonally adjusted, in the "other sector" for private sector dwellings, which includes volatile apartment projects. The more stable private sector housing approvals rose by a seasonally adjusted 3.3%. Add to that the fact that most of the increase in new building approvals was in Queensland, which experienced a 31.6% seasonally-adjusted rise in total new dwellings and a 24.9% gain in private sector houses. Whilst New South Wales and Victoria saw further declines. As with the US figures we need a few more months data for confirmation of a trend change.

What does all this mean? The economy is chugging along quite nicely. Expect a solid GDP number of around 1.5% to be reported tomorrow and the RBA to do nothing on rates.