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Reported earnings still forecast slow recovery

Consumer demand, Economic growth, Financial Events
By Paul Hodges on 17-Nov-2009

S&P Nov09.jpgThe Q3 company results season is now almost complete. It suggests that:

• Companies still find it difficult to forecast revenue increases
• Earnings are instead being boosted by cost cutting eg jobs

In the US, the average workweek is now at a record low of 33 hours. Whilst EU companies are worrying whether today’s short-time working arrangements can continue into 2010 if demand does not start to recover.

The above chart, from S&P, shows that analysts’ expectations still diverge for reported and operating earnings. Forecasts for operating earnings remain very bullish (blue line), but reported earnings (which meet accounting standards) are still showing a flat outcome, once last year’s destocking falls out of the picture.