Consumer spending surges
NEW YORK ? A surge in consumer spending helped corporate America achieve its 16th straight quarter of double digit earnings growth, and even the return of $3-per-gallon gasoline hasn’t deterred companies from issuing upbeat forecasts for future quarters.
As of Friday morning, with 423 companies in the Standard & Poor’s 500 index reporting earnings for the first quarter, 285, or 67 percent, beat Wall Street forecasts. Another 66 companies, or 16 percent, matched expectations, while 72 companies, or 17 percent, failed to meet analysts’ estimates.
The results extended a corporate winning streak: Over the past eight quarters, 66 percent of S&P 500 companies have beaten estimates, with 15 percent matching and 18 percent below estimates.
“The nice thing about this quarter is that while the numbers continue to be good, it isn’t focused all on energy,” said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia. “We’re seeing strength in industrials, retailers, telecom. Even health care had a decent quarter.”
Furthermore, despite the belief of economists and market watchers that economic growth will start to decline as early as this quarter, fewer companies have issued profit warnings.
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WASHINGTON ? New hiring slackened last month to the slowest pace since the fall, as retailers cut thousands of jobs. Manufacturers and other businesses boosted employment, though, and the national jobless rate held steady at 4.7 percent.
The latest snapshot, released by the Labor Department on Friday, painted a mixed picture of the country’s employment climate and suggested the economy is heading for more moderate but still healthy growth, analysts said.
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WASHINGTON ? U.S. workers raised their productivity in the opening quarter of this year. Their compensation went up briskly, too. From a worker perspective more generous compensation ? wages and benefits ? is a good thing. But economists worry that big gains ? if sustained for a long period ? could cause inflation to take off.
The Labor Department reported Thursday that productivity _ the amount an employee produces for every hour on the job _ grew at an annual rate of 3.2 percent in the January-to-March quarter. That marked a turnaround from the closing quarter of 2005, when productivity actually declined at an annual rate of 0.3 percent.