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UPS Cuts Guidance, Troubling Sign for U.S. Economy

UPS Cuts Guidance, Troubling Sign for U.S. Economy
Image credit: David Paul Morris/Bloomberg
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UPS has sharply lowered its financial guidance, suggesting that signs of pickup in the U.S. economy might be overblown.

The shipping giant now says it sees adjusted earnings of $4.65 to $4.85 a share for this year, as opposed to the previous view of $4.80 to $5.06. That view was already below what analysts expected when it issued the guidance in January.

Why the cut? UPS blamed overcapacity, a growing preference by customers for cheaper shipping options, and a slowing U.S. industrial economy.

Recently, economists have been more sanguine about the prospects for the U.S. economy, citing data that shows a slow, steady recovery.

But UPS's results are widely viewed as an important bellwether for businesses of all sizes, since commerce relies so heavily on shipping.

UPS is not alone in warning that the economy is not growing as sharply as many analysts have predicted. Last month, FedEx Corp. said it, too, sees sluggish economic growth and customer preference for international economy shipping services.

Related: Small Business Optimism Grows Despite Stagnant Hiring, Paycheck Size

Edition: May 2017

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