Corporate profits are going to have a hard time meeting analysts’ bullish growth forecasts, says National Bank Financial in a new report.

The second quarter earnings season is winding down with S&P 500 operating profits on track to expand 12% from year-ago levels, it says.

NBF notes that this will mark the 13th straight quarter of double-digit earnings growth according to Standard & Poor’s, the longest such sequence since 1992-1995.

“Looking ahead, the bottom-up consensus of analysts remains bullish by calling for this performance to extend through 2006,” NBF says.

NBF is skeptical, however. “This is a tall order as it implies that earnings will again need to rise much faster than overall economic growth. With the Fed still in tightening mode and still no relief in sight on the oil front, companies will thus be hard-pressed on the productivity front in order to expand margins from current elevated levels,” it cautions.

NBF adds that there is only one precedent for higher margins: the period 1962-1966 which was characterized by strong productivity growth of around 3.7%. “Current profit expectations are unlikely to be realized if labour productivity growth does not pick up from its current pace of around 2.6% (the average for the last three quarters),” it concludes.