Thursday, April 10, 2014

UK profitability flat and still below peaks

by Michael Roberts

The latest data on UK corporate profitability have been released – to complete figures up to the end of 2013.  The UK’s national stats office is one of the few that provides some very useful data on profitability – and often compares it with other countries too.  According to the data, private non-financial corporations’ profitability, as measured by their net rate of return, was estimated at 11.7% in Q4 2013.  That’s up from the trough in 2009, but still lower than the rates experienced in 2008.  In reality, the rate of profit has been pretty much flat since 2010.
Net ROP quarterly
The net (that’s after depreciation) rate of return in the UK manufacturing sector reached 12.1% at the end of 2013, the highest level since mid-2008.  In contrast, service sector profitability rate was at 13.9%, down from 2012 and still below peaks in 2008.  UK corporate profitability is still some 21% below where it was in 1997, when it reached 14.5%.  And it is still 20% below its next peak year in 2008, and up only a measly 5.5% from the trough of 2009 reached at the end of Great Recession.
UK rate of return on capital

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