Prospects for a recovery in U.S. corporate profits this year are dimming after third-quarter earnings growth slowed and the federal government’s shutdown hindered trade and threatened to crimp consumer spending.
Earnings rose an estimated 1.4 percent for Standard & Poor’s 500 Index companies last quarter, trailing gains of 3.8 percent in the previous three months and an average 10 percent over 15 years. Analysts have reduced the quarterly estimate by 75 percent since June, according to data compiled by Bloomberg.
The partial closing of government operations that furloughed as many as 800,000 federal workers has spread to the private sector, leaving thousands more employees idle at contractors such as URS Corp. and Lockheed Martin Corp.
Caterpillar, the world’s largest maker of construction and mining equipment, may post a decline in sales and profit for the fourth straight quarter, on lower global demand for machines used to mine copper and iron ore, pave roads and erect buildings. At General Electric Co., the largest maker of jet engines and locomotives, revenue fell 1 percent after dropping 4 percent in the second quarter, estimates show.
Some industrial and housing businesses did well last quarter. U.S. car buyers’ revived interest in Detroit autmakers may have helped General Motors Co.’s per-share earnings rise for the first time this year on an increase of about 5 percent in revenue, according to analysts’ average estimates.