The profitability of private non-financial corporations slipped in the last three months of 2017, whereas manufacturers' returns increased by 2%.
The results from the latest Office for National Statistics (ONS) report show that the rate of return for non-financial companies in the UK fell to 12.5% in quarter four, down from 12.7% in the period of July to September.
Reportedly, service companies took the biggest hit, with return rates falling nearly a full per cent between the third and fourth quarter last year. The service sector’s annual rate of return fell to 18.3%, down from 18.8% cent in 2016.
According to the study, manufacturing companies had a stronger performance, with returns rising from 13.8% in quarter three to 15.8% in the final three months of the year.
The results come just a day after the ONS announced that manufacturing output had fallen 0.2% in February, with the biggest decline seen in the manufacture of machinery.
The rise in profits for manufacturing last year means that the sector’s profitability has reached its second-highest value to date. This comes as the latest IHS Markit survey found that manufacturers’ growth expectations are the highest in over two-and-a-half years.
“A possible reason for this could be increases in export sales, linked to the past sterling depreciation and improving global economic demand, which should improve profit margins,” said the ONS report.
Buoyed by a jump in US oil prices, UK continental shelf companies also saw profits increase in the fourth quarter, jumping 2.3% from the previous three months.
Get insights like this delivered straight to your inbox
5 Digital Briefings | 5 Front-of-Mind Topics | 5 Days a Week
- Monday: Manufacturing Innovation
- Tuesday: Manufacturing Leadership
- Wednesday: Digital Transformation
- Thursday: Industrial Automation
- Friday: Industrial Internet
Sign up for free here.