Sir Martin Sorrell, chief executive of WPP, the advertising giant, declared that his industry was continuing to emerge from a long recession.
He said that "we are climbing further out of the bath", extending his famous characterisation of the media downturn as bath-shaped: with an extended period of "bumping along the bottom", followed by only a gradual recovery.
"There is evidence of clients switching their attention from three years of cost management to top-line revenue growth," Sir Martin said.
For the third quarter, WPP yesterday reported that revenues rose by almost 11 per cent, driven by its recent acquisition of Cordiant. On a like-for-like basis, revenues increased over 1 per cent in the third quarter and by under 1 per cent for the first nine months of the year.
The US continued to improve and Asia, Africa and Latin America were all doing better. However, the company said Europe, especially the UK, lagged behind. Sir Martin said that the Asia Pacific region was becoming more autonomous, it now "has its own engine - China" and so would not necessarily follow US trends.
The company said: "The North American market has not only stabilised, but has started to show muted growth. Like-for-like growth started in September 2002 and September 2003 marks thirteen months of continuous growth, albeit low single digit."
Sir Martin said that, given the interconnected nature of the world economy, the UK and Europe would follow the US out of recession next year.
"Prospects for 2004 remain better. The United States presidential election and concurrent fiscal deficit spending in front of it to stimulate the economy, the Athens Olympics, the European football championships and the impact of heavy political advertising in the US on media rates and supply, will strengthen advertising and marketing services spending, particularly in the US. This will spill over into the UK, [and] continental Europe," he said.
Sir Martin said his forecast growth was "nothing to shout about". He saw expansion of 3 to 4 per cent next year, or just 0 to 1 per cent in real terms. In addition, he queried whether the 2004 recovery will be sustained. "The worry remains, however, that 2005 might see inflation as a result of government deficit spending on both sides of the Atlantic. Commodity prices, the long-end of the bond market and gold prices may be signalling this already, and a returned incumbent or new United States President might have to take corrective action," Sir Martin said.
WPP said it remained focused on its strategic objective of improving operating profit by 10 to 15 per cent, with a 2003 operating margin target of 13 per cent.
Kingsley Wilson, an analyst at Investec Securities, said: "While continental Europe remains tough, WPP appears to be faring better than the trend, likely due to its client bias which is more weighted to US based clients operating in Europe. Asia Pacific, Latin America, Africa and the Middle East have growth in each quarter of 2003 though in certain cases off a depressed base in 2002."