Total business profit

IBISWorld forecasts total business profit to slump by 0.8% in 2024-25, to $534.4 billion. A combination of negative consumer confidence and rising geopolitical uncertainty underpins this drop. Despite an easing, elevated interest rates have subdued growth in household discretionary spending and kept consumer confidence negative. These trends are placing downwards pressure on revenues across various sectors. Adding to these challenges are escalating global trade tensions, particularly with the return of US tariffs under Trump's administration. These measures have heightened volatility in international markets and disrupted established supply chains, making it more difficult and costly for exporter industries to access key overseas markets. The uncertainty around export volumes, import of key inputs, and commodity prices is placing further strain on total business profits. Even so, growth in realised farm incomes limits further slumps in total business profit in 2024-25.

Despite recent drops, total business profit has expanded over the past five years, supported by significant rises in some commodity prices, like 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 supported profitability in the Iron Ore Mining industry prior to the plunge in iron ore prices in 2024-25. 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, like rock lobster, are high in value and have strong profit margins, which has boosted total business profit over the past five years.

The Manufacturing division has expanded over the past five years, fuelled by demand for food product manufacturing. Yet, intense import competition has hampered business profitability among domestic manufacturers, a trend exacerbated by high operating costs. Postal and courier pick-up and delivery services operators have also recorded modest growth over the period, benefiting from a rise in online shopping following the COVID-19 outbreak. This has made up for the lower profit in several key manufacturing industries. IBISWorld forecasts total business profit to climb at a compound annual rate of 5.7% over the five years through 2024-25.