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American corporate profits lose their momentum in first quarter
US corporate profits before tax rose 5.5 per cent in the first quarter on the previous three months but this was down from eight per cent in the fourth quarter of 2009.
Rob Carnell at ING said: “Such weakness lends some credibility to thoughts of further equity market softness, as this data can provide a good lead to company earnings.”
He added: “Profit weakness also hints at only weak improvements in investment spending and employment in the quarters to come.”
Analysts said the stronger dollar will make second-quarter profits earned overseas look weaker, while the renewed turmoil in the markets will hit financial profits. The growth rate of non-financial domestic profits is expected to slow, as rising employment drives up unit labour costs.