2023-08-30 21:27:00
US corporate profits are rising once more following four consecutive quarters of falls, according to government data published on Wednesday.
After-tax profits for non-financial companies increased by 4.5% in the second quarter, according to a report on gross domestic product from the Bureau of Economic Analysis. Measured as a percentage of gross value added (a benchmark for added profit margins), they increased from 13,8% al 14,3%.
Forecasters track corporate earnings because it is believed that they are a leading indicator of business investment and broader fluctuations in the economy. The drop seen in recent quarters from the all-time highs reached during the pandemic was seen by some as a harbinger of recession, and the rebound comes just as economists at the Federal Reserve and some Wall Street banks are reversing their recession projections. economic.
“The idea that arose this year was that companies were perhaps going to find themselves under pressure, because their customers were going to stop accepting price increases, at the same time that the cost structure was going to continue to be really challengingsaid Stephen Stanley, chief economist at Santander Capital Markets US.
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“Actually, companies did see some relief on the cost side, and it seems to me that — depending on what industry you’re in, obviously — pricing power is being maintained”he pointed.
The government data is more extensive than the figures compiled from quarterly earnings reports of publicly traded companies, because it also includes results from unlisted companies.
Even so, Large publicly traded companies may also be seeing a new surge in profits. It is expected that the earnings of the S&P 500which in the second quarter declined from a year earlier, stabilize in the second half of this year and then begin to accelerate once more, according to figures compiled by Bloomberg Intelligence. It is expected that by the end of next year they will grow at an annual rate of around 13%.
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Whether companies can keep margins above pre-pandemic levels going forward depends in part on job prospects, Stanley explained, citing the United Automobile Workers union’s impending negotiations with General Motors, Ford Motor and Stellantis as an example.
“At this point, it looks like the workers are ready to fight,” he said. “I don’t think corporate profit margins can be counted on to stay high at the expense of labor.”
Translated by Pauline Steffens.
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