By Sinéad Carew
(Reuters) - U.S. companies' taste for their own shares is set to push buybacks past the $1 trillion-a-year mark for the first time as soon as November, TrimTabs Investment Research said, even as its latest data showed the pace of new repurchase announcements slowing during the second-quarter reporting season.
Companies have been using a chunk of their savings from a slashing of corporation taxes in the tax law passed late last year to go on a share repurchase spree.
Announcements made in the second-quarter reporting season up to Aug. 17 brought the year-to-date tally to $769 billion, putting U.S. companies on track for a $1 trillion of repurchase announcements around November, according to David Santschi, director of liquidity research at TrimTabs.
The previous record for annual share repurchases was $809.6 billion in 2007, Santschi said.
"The only reason we wouldn't get there is if the economy turns down and corporate borrowing costs go up," he said.
But in the latest reporting season U.S. companies announced an average of $3 billion in buybacks on a daily basis compared with the $3.5 billion a day average for the past eight earnings seasons, according to TrimTabs.
Daily buyback announcements in the second-quarter reporting season were below the $6 billion average for the first two earnings seasons of 2018, although that number was inflated by Apple (O:AAPL)’s record $100 billion buyback announcement in May, according to the research firm.
While there is typically a lull in buyback announcements in the reporting season spanning mid-July to late August, Santschi said the drop could be a sign of caution among corporations.
"It wasn't extremely low but it was lower. It could be some of the rhetoric about trade and currency is making people uneasy," said Santschi. "Buybacks tend to be heavy when executives are feeling good about business. If they're not feeling good they cut back."
He also noted that buyback announcements hit a record in both the January/February and the record was then surpassed in the April/May reporting season.
For the year so far daily buyback announcements have averaged $4.8 billion, compared with the previous record of $3.2 billion in 2007.