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U.P.S. – THE U.S. ECONOMY IS STABLE, RISKS IN ASIA….

This morning’s earnings from United Parcel Service show the continuing disparity between domestic and international growth.   While domestic package growth was flat, international package growth came in at 4.5%.  The company said:

“Revenue increased 6.5% and operating profit improved more than 11% over the 2010 third quarter adjusted results. Operating margin expanded 60 basis points to 13.1% due to higher yields, favorable product mix changes and network efficiencies. Total domestic volume growth was flat as a result of the slow U.S. economy; however, UPS Next Day Air® volume rose 1.3%.

On a reported basis compared to the third quarter of last year, operating profit decreased slightly and operating margin contracted by 90 basis points.

At the end of the quarter and just in time for the holidays, UPS unveiled a ground-breaking solution for residential deliveries. UPS My Choicesm enables U.S. consumers to take advantage of the unique delivery options that only UPS can offer. Since the product launch in early October, over 100,000 subscribers have enrolled.

Revenue for the segment improved more than 14%, driven by export volume growth of 6.5%. Revenue per piece climbed 9.4% with currency, higher fuel surcharges and base rate increases all contributing.

Operating profit and margin for the segment declined due to excess capacity caused by a deceleration in package volume on the Asia-to-U.S. trade lane. They also were negatively impacted by product mix, higher fuel prices and currency fluctuations.”

On the conference call this morning the company’s CEO said they were seeing signs of stabilization in the US economy:

“We’re probably a little bit more optimistic than we were one or two months ago,”

He added that there are continued risks in Asia as export growth has been generally weaker than expected.

All in all, this bodes relatively well for the U.S. economy.  We do not appear to be seeing the massive fall-off in growth that so many have predicted for the domestic economy.  On the other hand, the exogenous risks remain.

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