Corporate Profits Bounced In Q2

Profits climbed 3.9% quarter-over-quarter, after having gone negative in Q1.

"Second-quarter corporate profits rebounded by 3.9% q/q (unannualised), after falling by 1.3% in the first," said Capital Economics' Paul Ashworth. "Nevertheless, a big jump in dividend payments meant that net cash flow actually fell, which is not an encouraging sign for the investment outlook."

From the Bureau of Economic Analysis (BEA):

Profits from current production (corporate profits with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj)) increased $78.3 billion in the second quarter, in contrast to a decrease of $26.6 billion in the first. Taxes on corporate income increased $10.5 billion, in contrast to a decrease of $25.0 billion. Profits after tax with IVA and CCAdj increased $67.9 billion, in contrast to a decrease of $1.7 billion.

Dividends increased $273.8 billion in the second quarter, in contrast to a decrease of $103.8 billion in the first. The large second-quarter increase primarily reflected dividends paid by Fannie Mae to the federal government. Undistributed profits decreased $205.9 billion, in contrast to an increase of $102.1 billion. Net cash flow with IVA -- the internal funds available to corporations for investment -- decreased $194.6 billion, in contrast to an increase of $140.7 billion.

Corporate profits by industry

Domestic profits of financial corporations increased $14.3 billion in the second quarter, in contrast to a decrease of $4.1 billion in the first. Domestic profits of nonfinancial corporations increased $50.4 billion, in contrast to a decrease of $3.1 billion.

The rest-of-the-world component of profits increased $13.6 billion in the second quarter, in contrast to a decrease of $19.6 billion in the first. This measure is calculated as the difference between receipts from rest of the world and payments to rest of the world.

Here's a breakdown via the BEA: