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Tue, Oct 28, 2003 - Page 12 News List

US corporate profit gains biggest in last three years

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US corporate profits had the biggest quarterly gain in more than three years, helped by consumer spending, rising demand for manufactured goods and a weaker dollar.

Profits rose an average of 21 percent in the third quarter for the 323 companies in the Standard & Poor's 500 Index that had reported earnings by Friday. The gain is the largest since a 22 percent increase in the second quarter of 2000, according to Thomson Financial, a unit of Toronto-based Thomson Corp that tracks earnings.

Tax cuts have given consumers more money to spend, lifting sales for computer-related companies such as Intel Corp and Texas Instruments Inc. The lowest interest rates in 45 years led to more borrowing from banks, including Citigroup Inc. Job reductions and cost cuts helped American Airlines parent AMR Corp report its first profit in more than two years.

In the fourth quarter, profits are likely to grow about 25 percent. Earnings gains also will slow next year because they will be compared with this year's results. The latest quarterly earnings increase contrasts with profit growth of 6.8 percent a year earlier, Hill said.

Economists expect the US economy to grow 3.8 percent next year.

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