US corporate profits fall 3.3% as economic growth virtually stalls

Washington: US corporate profits fell 3.3 per cent in the fourth quarter of 2007, according to government data on Thursday that also confirmed US economic growth nearly slowed to a halt in same period.

In more positive econ-omic news, a second government report showed the number of US workers filing new claims for jobless benefits fell by 9,000 last week and the number of people remaining on benefits rolls after receiving an initial week of aid also declined.

The jobless data helped boost stocks in early trading, before news of revenue shortfall at Oracle raised concerns of a downturn in business spending and pushed stocks into the red.

Wall Street analysts had forecast only a 0.1 per cent drop in corporate profits, despite a crisis in the US subprime mortgage market that has hobbled US economic growth. The drop in corporate profits was the first in a year, and the Commerce Department said profits of both financial and non-financial companies fell. The department said non-financial company labour costs rose, but were partially offset by price increases.

Profits rose just 2.6 per cent for all of 2007, compared to a 12.2 per cent gain in the prior year.

The report confirmed the US economy grew at an annual rate of just 0.6 per cent in the fourth quarter, unchanged from a previous estimate and down sharply from 4.9 per cent in the third quarter.

The US economy grew 2.2 per cent for all of last year, the slowest since 2002, the Commerce Department said.

The GDP data was in line with expectations.

"We'll take any upside surprise we can get at this point," said Rhonda Power, corporate trading manager at Travelex Global Business Payments in Toronto. "But there are still some significant concerns about the economy."