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Early reports for U.S. earnings season point to a recovery in sales growth that bodes well for upcoming employment data.

Despite Monday's U.S. market closing this is the busiest week for S&P 500 earnings with 27 per cent of companies slated to report. To date, 74 companies have announced results, and average sales growth – at 5 per cent – is returning after a disappointing third quarter.

The lack of top-line revenue growth has been a major hurdle for the U.S. economy. With less money coming in, U.S. corporations have been cutting costs by firing staff in order to meet profit growth targets. This has been an effective strategy in the short term, but because laying off staff reduces overall consumer demand – essentially those companies are firing their own customers – the practice presents long-term challenges to the economy.

The health care and oil and gas sectors have been the leaders so far, boosting year-over-year revenues by 8.37 and 9.7 per cent, respectively (although only two of 41 oil and gas companies have reported). Only two sectors, technology and basic materials, have seen sales decline.

The 74 companies that have reported make up only 15 per cent of the S&P 500 so investors should be cautious about extrapolating the trend too far. Nonetheless, the return of top-line growth is a welcome sign.

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