Credit crunch, weaker dollar take toll on US economy
Ernst & Young expects correction in the debt markets in Q4 as the credit crunch and weakening US dollar continue to drag on profits
Newly released research by
Ernst
& Young, shows that in the September quarter, 11 US companies cited the
weakening dollar in their profit warnings. For many exporters and companies with
significant US operations, the weak dollar will continue to drag on profits as
2007 draws to a close.
The report shows profit warnings from UK-listed companies in the third
quarter (Q3) remained stable at 86, compared with 88 in Q2 and 85 in Q3 2006.
Andrew Wollaston, Ernst & Young corporate restructuring partner, said he
had been expecting a correction in the debt markets for some time.
‘In our view, the “credit crunch” will begin to impact UK consumer confidence
and therefore consumer demand in the current quarter,’ he said. ‘Looking
forward, UK plc needs to factor this into forecasts to avoid a rise in profit
warnings in Q4 this year.’