15 January 2001, 15:15  Survey: UK companies Q4 activity higher but profitability lower

By BridgeNews
London--Jan. 15--U.K. firms reported strong business activity in the fourth quarter of last year but suffered yet a further squeeze in profitability, according to the EULER Trade Indemnity Quarterly Financial Trends Survey. The survey blamed intense competition, the sterling-euro exchange rate, higher oil prices, wage costs, and slower order book growth for the shrinking profitability.
* * * The ETI profitability index for the whole economy measured 45.4 in the fourth quarter from 44.6 in the third quarter. A reading beneath 50 means deterioration and a reading above means improvement. The latest reading signals deterioration but at a slower rate than the previous quarter.
Within the total, manufacturing profitability continues to suffer the most.Its index measured 40.9 in the fourth quarter from 38.6 in the third quarter but still making it by far the weakest sector.
Distribution, which includes retail, was the next weakest and experienced a sharp fall in the latest quarter. Its index measured 44.4 from 49.6 in the third quarter. The services sector, in contrast, staged a recovery, jumping to 52.1 from 44.4.
Construction remained the strongest sector, with profitability measuring 55.8 from 55.7 in the previous quarter.
Companies also complained that payment delays worsened in the fourth quarter from both domestic and overseas customers.
The survey was carried out by NTC Research and covered 510 respondents.

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