Corporate profit margins holding up despite cost inflation, rising wages

Net percentage of companies with rising profit margins.

Businesses haven’t been this positive about their profit margins in a long time.

Why it matters: We’ve been hearing a lot about cost inflation and rising wages. All other things being equal, these forces should be negative for profitability.

What they’re saying: A net 35% of professionals working for private-sector firms or trade groups said corporate profit margins expanded in the second quarter, according to a new survey from the National Association of Business Economics.

  • This was a record high in the survey’s 39-year history. Just 7% of respondents said margins were falling while 42% said margins were rising.
  • “Inflation, while increasing, is still very low, and according to the survey, many firms, especially in the goods-producing and the [transportation, utilities, information, and communications] sectors, expect increases in costs to be temporary,” NABE Business Conditions Survey chair Eugenio Aleman tells Axios.
  • “Thus, this could be influencing the response from survey participants that profits will continue to remain high in the near future.”