It's that time of year again.

It’s that time of the year again – reporting season. Whilst it doesn’t really kick into gear until next week 1H07 results have already started to trickle in and will continue for the next 3 weeks or so. Half year results give us an indication of how company profits are travelling and also serve as a gauge of the health of the broader economy. Company profits have been tipped to be lower than in the previous few years, some pundits putting growth in the high single digits however if US 4Q06 earnings for the S&P 500 are anything to go by I think we’ll still see double digit earnings growth this half in Australia. With about half of the reports already in, the S&P500 4Q06 median earnings growth according to this article is currently tracking at 12.5% with nearly 4 times more positive earnings surprises than negative.

Whilst company profits have been generally robust I’ve noticed a few large companies have been announcing hefty job cuts, namely Ford, Pfizer, Motorola, AstraZeneca and the latest casuality Chrysler rumoured to be announcing that 10,000 jobs will go. Cutting jobs is something you don’t normally do when business is good and whilst it’s a little sporadic to start calling it a trend I believe it’s another nail in the coffin of the Goldilocks economy argument. It will be interesting to see whether any ASX100 companies start talking about job cuts. It’s hard to imagine given the tight labour market and shortage of skills in some industries but it’s something that may be worth taking note of this reporting season.