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Are Nike's earnings a good sign for the economy?

Shares of athletic shoe and apparel maker Nike (NKE) soared Friday after a better-than-expected fiscal Q2 earnings report Thursday evening. Wall Street had been expecting earnings of $1.00 per share. The actual results came in much higher at $1.14.

While earnings were higher than expected, Nike failed to hit revenue estimates of $6.01 billion. The company posted revenues of just $5.55 billion during the quarter.  Everyone knew that sales in Europe would be weak during the quarter, but there were hopes that we would start to see things improve in China, but that was not the case as revenues from China were down 11% during the quarter.

Despite lower sales in both China and Western Europe, Nike was able to put up the strong numbers because of a huge quarter in North America, where its sales were up a whopping 17%, an amazing accomplishment considering how mature its business is in North America is.

Another good indicator of the strength of the U.S. economy is Nike’s future orders, which were up 14% in North America during the quarter. This is a clear indicator that retailers are expecting to see ongoing strength in the months ahead, as these orders will be delivered between December and April.

The U.S. economy remains in a fragile state, but Nike’s strong quarter and strong future orders are a clear indicator that the economy is continuing to improve.

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors.

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.