The healthiest US corporations are increasing their revenue-generating efficiency.

The median ratio of operating expenses compared to total revenues for companies rated investment grade by S&P Global Ratings fell to 82.1% in the third quarter, down from 83.1% in the second quarter, according to the latest data from S&P Global Market Intelligence.

The improving metric shows companies are boosting revenues by more than their expenses are increasing amid easing inflation and a resilient economy despite the Federal Reserve's interest rate hikes.

Total operating expenses such as rent, salaries and insurance for companies rated BBB- or higher by Ratings fell by 1.5% in the quarter to $2.825 trillion. The decline is about the same when compared to the same quarter in 2022.

Companies with weaker financials have also cut costs in recent quarters, with the latest figure down 4% quarter over quarter to $615.63 billion. On an annual basis, operating costs for noninvestment grade companies fell 8.8%.

Sectors

The information technology sector enjoyed a particularly strong quarter with the median operating expense ratio for investment grade-rated companies falling by more than 2 percentage points to 81.2% while for non-investment grade companies the ratio fell 1.5 percentage points to 93.0%.

By contrast, median ratios rose for companies in the materials sector despite costs being cut. The investment grade tranche of companies cut operating expenses by 2.2% in the quarter to $89.42 billion yet the ratio still rose by 1 percentage point to 87%.

Costs rose strongly for energy companies with median quarter-on-quarter rises of 9.9% and 8.3% respectively for investment grade and non-investment grade components. Median ratios rose to 82.5% from 80.1% for higher-rated companies and 85.5% from 79.9% for the lower-rated companies.