Manufacturers’ Profits Rise in First Quarter

From Times Wire Services

Profits at major U.S. manufacturers rose in the first three months of 1998 to an average 7.5 cents per dollar of sales, up from 5.9 cents in the fourth quarter of 1997 and 6.3 cents in the 1997 first quarter, the Commerce Department said.

Meanwhile, a quarterly survey of business economists showed that most think U.S. monetary policy is about right and should remain on hold for the next six months, according to a survey of business economists released Monday, although a substantial minority wanted tighter policy.

In its survey of 225 economists, the National Assn. of Business Economists found 76% of panelists “expect and prefer” the Federal Reserve Board to keep key interest rates steady for the time being.

Still, it added, “a very substantial share expect and prefer that monetary policy be tightened.” Some 22% of economists said monetary policy was “too stimulative.”


The survey was conducted in the last two weeks of May.

The Fed has kept rates unchanged since March 1997, most recently counting on the effects of Asia’s economic turmoil to put a damper on buoyant growth in the U.S. economy.

Almost a fifth of the economists surveyed said Asia’s crisis was the “most serious economic problem facing the United States today.”

Another quarterly report showed delinquency rates on consumer loans and credit cards--the percentage of accounts 30 or more days past due--edged up to 3.11% from 3.04% in the October-December quarter despite low unemployment and strong inflation-adjusted income growth.


A composite rate for other types of consumer loans, including auto loans and closed-end home equity loans, fell to 2.36% from 2.43%, the American Bankers Assn. said in its report. It was the lowest rate since the fourth quarter of 1996.

Both rates were below their level of a year ago and the credit card rate was significantly down from the record, 3.72% set in the fourth quarter of 1996.

Nevertheless, the association’s economist, James Chessen, said, “the delinquency rates are still high enough to warrant concerns, and banks will no doubt continue the pattern of tighter lending standards for higher-risk customers.”

In the profits report, the Commerce Department said manufacturers’ after-tax profits totaled $74.1 billion in the first quarter of this year, rising from $59 billion in the fourth quarter of 1997. In the first quarter of last year, after-tax profits totaled $61.3 billion.


And the annualized after-tax return on stockholders’ equity in the companies was 19.6% in the first quarter, up from a 14.5% rate in the fourth quarter and a 17% rate in the first quarter of 1997, the government said.

Bloomberg News and Reuters contributed to this report.