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Daily Sound Bite: Sagging Productivity Eats Into Corporate Profits

Thu, 02/07/2013 - 12:38pm

With economic activity shrinking in the fourth quarter of 2012, worker productivity also contracted. The figure will rebound and the downturn was caused by temporary factors, say economists, but not without some impact on corporate profits. Paul Ashworth, chief U.S. economist at Capital Economics, said,

"The slowdown in productivity growth will put some downward pressure on corporate profit margins, which are currently close to record highs. That's another reason to suspect that stock markets could have a more disappointing time in the second half of this year."

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