Just as the U.S. economic recovery finally seems to be picking up profit margins seem to have peaked.
Stronger GDP growth should help domestic revenue pick up. But belt-tightening may have run its course while commodity and labor cost pressures start to build.
Operating profit margins for the S&P 500 companies have risen for seven straight quarters, as corporations used sharp cost cuts to leverage modest sales gains. But they likely dipped to 8.81% in Q4 from Q3′s 8.95%, predicts Howard Silverblatt, senior index analyst for Standard & Poor’s.
GAAP profit margins, which include various charges, peaked in Q2 at 8.31%, fell to 8.11% in Q3 and likely sank to 7.23% in Q4, according to Silverblatt.