Recession fears are growing among large U.S. companies that are expected to report quarterly declines in profits and sales for the first time since the recession, according to The Wall Street Journal.
“The industrial environment’s in a recession. I don’t care what anybody says,” said Daniel Florness, chief financial officer of Fastenal Co., the newspaper reported
. A third of the top 100 customers for Fastenal’s nuts, bolts and other factory and construction supplies have cut their spending by more than 10 percent and nearly a fifth by more than 25 percent, he said.
rose in September at the slowest pace in more than two years, the Institute for Supply Management said this month. Manufacturers told ISM that customer inventories remained high, contributing to a slowdown in new orders.
The crash in oil prices since the summer of 2014 explains part of the slowdown among manufacturers that supplied energy producers with equipment. The dollar strengthened with the expectation that the Federal Reserve would raise interest rates for the first time since 2006, and that pressured earnings from overseas markets.
Corporations are taking on record levels of debt to fund dividends and stock buybacks, while cutting jobs. Twitter Inc., Biogen Inc., Wal-Mart Stores Inc. and Monsanto Co. have announced job cuts in recent weeks, according to the WSJ.
The unemployment rate
held steady at 5.1 percent last month, the lowest point since April 2008.
Still, some see reason for optimism as lower gas prices have helped to boost car sales and airlines, while construction and aerospace are doing well. Amazon.com Inc., Microsoft Corp. and Google parent Alphabet Inc. rallied after reporting strong results last week.
“Things are definitely a bit shakier than they were several months ago,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank, told the WSJ. But, he added, “the U.S. is fundamentally in decent shape.”
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