The ONS resumed publication of the First Release, 'Profitability of UK Companies' in November. This release measures the profitability of the corporate sector using rates of return on capital employed. For the first time, service companies' profitability is calculated. The results are analysed in this article which looks also at the financial position of non-financial companies in 1998 and in the first two quarters of 1999. Four peaks in company profitability are shown. The latest, 1996/97, is just below the highest in 1989. There are three troughs. Companies' profitability was not hit as severely in the 1990/92 recession as in the previous two recessions. In 1998, there was a decline in the net rate of return earned by all non-financial companies. There are mixed trends in profitability for manufacturing and service companies. Manufacturing companies have improved their profitability in the 1990s. Perhaps surprisingly, this continued in 1998 when manufacturing companies maintained their net rate of return at 11.0 per cent. Service companies' profitability has been stable. In 1998, the profitability of service companies fell to a net rate of return of 14 per cent, from a recent high of 15 per cent in 1997. Other main points from this review include the record net borrowing of the corporate sector in the second quarter of 1999, what caused it and how it was financed.
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