UK profits recover from slump

 
Julian Harris
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CORPORATE profitability jumped to its highest level for 18 months in the third quarter of last year, official data showed yesterday.

Strong economic growth boosted sales, with non financial corporations seeing their net rate of return increase to 11.9 per cent – up from 11.6 per cent the previous quarter.

The result marked a year of growth, as companies recover from the 16 year low of 10.8 per cent in the third quarter of 2009, the Office for National Statistics (ONS) announced.

Manufacturers reaped the rewards of a resurgent sector, with net rates of return shooting up to 8.7 per cent, from 7.5 per cent in the previous quarter, and five per cent in the first three months of the year.

And Britain’s offshore oil and gas industry saw profitability rise to 44.8 per cent – the highest rate since the end of 2008, and a large jump from 39 per cent in the second quarter of last year, and 36.5 per cent in the first quarter of 2010.

Yet profitability is still well below its 2007 peak, and the 2008 average net rate of return of 14.3 per cent.

“The improved profitability performance in the third quarter is welcome news, which is supportive for investment,” said Howard Archer if HIS Global Insight.