General Electric hit by US economic slowdown

General Electric (GE) has surprised Wall Street with a fall in earnings and a profit warning just a few weeks after chairman and chief executive Jeff Immelt made an upbeat presentation to shareholders.

The US conglomerate, which is one of the most popular shares in the US, said group profit would be 6% lower at $4.3 billion (£2.2 billion), with profits at GE Money down 19% and the industrial division down 16%.

The company had been expected to post quarterly earnings, not including discontinued operations, up 6%, but actually recorded an 8% fall.

The company offers a wide range of products and in addition to offering commercial and consumer financial products, the group produces jet engines, water treatment plants, medical equipment and controls media company NBC Universal.

The disappointing performance of the industrial division is seen as an indication that problems in the financial markets are filtering through to the wider economy.

According to Stephen Surpless, an analyst at Cantor Fitzgerald in London, these results confirm that the slowdown is widespread and beginning to impact capital expenditures and longer-cycle businesses.

Mr Immelt said the company was performing better outside of its home market in the US. Our financial services businesses were challenged by a slowing US economy and difficult capital markets, said Mr Immelt.

While we are disappointed with our results, the fundamentals of our businesses are strong, concluded Mr Immelt.

GE said it sold fewer household appliances last month than it anticipated raising concerns that the debt-burdened US consumer is holding back on big purchases in greater numbers than originally expected.

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