I have been trying update the position on US corporate profitability but have been unable to do so while the US government was shut down. Now it has opened up again, I shall get back to that task. In the meantime, I cam across a new analysis of the state of Eurozone corporate profitability hidden deep in the latest IMF report on Global Financial Stability (GFSR, http://www.imf.org/External/Pubs/FT/GFSR/2013/02/pdf/text.pdf), which looked at the profitability of large and small corporations in five Eurozone economies. The IMF aggregated corporate earnings before tax and interest payments against assets based on firm-level annual data from the Bureau van Dijk’s Amadeus database. The sample includes more than 3 million non-financial firms, both publicly traded and private, from France, Germany, Italy, Portugal and Spain.
The analysis finds that corporate profitability in those five countries remains well below the peal levels of 2007, with the exception of German companies. French corporate profitability was 18% below its 2007 level in 2011, Spain’s was 30% below and Italy and Portugal was 22% below. Given that 2012 was year of recession or even depression for most Eurozone economies, profitability is unlikely to have recovered last year or even this year. Only German companies have done better since the trough of the Great Recession in 2009, but even so profitability there is still 8% below the 2007 peak.
The IMF’s data confirm my own measures based on the EU’s AMECO macro database.
So even if US corporate profitability has more or less recovered to the level of 2007 (and that I still to need to analyse), the Eurozone’s capitalist sector remains in the doldrums, thus keeping investment and economy recovery down.