UK company profits highest for four years

Companies are more profitable than at any time for nearly four years as confidence in the UK economy continues to pick up, according to official figures out today.

Overall profitability of non-financial firms rose for the fourth quarter in a row to its highest level since the final months of 1999, data from the Office for National Statistics (ONS) showed.

Profitability of private sector firms was 12.6% between July and September compared with the 2002 average of 11.4%, the ONS said.

Its findings follow other positive surveys in recent days that point to an expansion in the manufacturing, construction and retail sectors.

The Chartered Institute of Purchasing and Supply (CIPS) published figures yesterday that showed the service sector expanding for the ninth consecutive month.

This upbeat outlook for the UK economy was fuelled by a CBI survey yesterday that showed a majority of retailers reporting sales growth over Christmas.

The ONS said overall profitability benefited from a bounce back in performance among oil and gas companies to 29.0% after the sector hit a four-year low of 24.2% in the period between April and June.

Manufacturing companies maintained their profitability with 7.4% of firms in the black during the three-month period, the ONS said.

The number of service sector firms reporting profits was 14.7% – similar to the average for the past two years.

The service sector, which includes restaurants and hotels, is more profitable than manufacturing because it is not as capital intensive, the ONS said.