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Company results delivered in February were sound if numbers from the two mining majors are removed from analysis.

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Lower prices for iron ore led to reduced profitability and dividends for Rio Tinto and BHP. Apart from these results, reporting season was quite balanced in terms of upside and downside surprises.

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Dividends and capital management were positive factors. Increased dividends outnumbered declines two to one. A large number of companies maintained payouts leading to a generally healthy cash flow position for shareholders.

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Commentary revealed some important insights for a critical component of the economy, the consumer.

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On the one hand, the cost of living remained an ongoing constraint for consumers.

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Cochlear implant revenue disappointed as affordability became an issue. This sent the company’s share price down 14%. By comparison, Wesfarmers’ cost friendly retailer, Kmart, increased sales and earnings with its offer appealing to budget sensitive consumers.

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Meanwhile, advertisers such as Nine Entertainment and NZME reported advertising revenues to be up high single digits and improved operating conditions respectively. This is an important indicator of changing consumer conditions.

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This observation was corroborated by commentary from Flight Centre and Harvey Norman reporting a better run-rate into the second half along with improvement in consumer confidence.

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The economy appears to be on a sound footing for gradual improvement. The ASX reported increased listings, increased futures and cash market trading volumes. Contributions from the resource majors is likely to be subdued because China is unlikely to continue to stoke property development. At home, the likes of Stockland are awaiting lower interest rates to drive demand for new housing. Any rate cuts, if they do occur, will be tempered by higher wholesale funding costs. Both National Australia Bank and Bendigo called out the rolling off of cheaper facilities, impacting net interest margins.