Sales Increases at More U.S. Companies Signal Payroll Gains, Survey Shows

More U.S. companies than at any time since 1994 reported sales gains in the first quarter, a sign they’ll keep hiring and investing, a survey showed.

The percentage of businesses reporting an increase in sales in the past three months climbed to 63 percent, while fewer companies said revenue fell, according to a survey issued today by the National Association for Business Economics.

Rising sales and profit margins help explain why economists project the labor market will improve in coming months and capital spending will keep manufacturing at the helm of the economic expansion. At the same time, the share of firms that raised prices to recoup higher materials costs more than doubled from the prior survey, signaling inflation may pick up.

“The economy continues to recover,” Shawn DuBravac, chief economist at the Consumer Electronics Association in Arlington, Virginia, who analyzed the results, said in a statement. “Both recent results and the outlook for sales and profit margins continue to improve.” Even so, the survey reflects “early signs of inflationary pressures.”

Some 38 percent of respondents said the economy will grow at least 3.1 percent this year, on a fourth quarter-to-fourth quarter basis, compared with 20 percent in the January survey.

The outlook for employment strengthened compared with the association’s January survey. No companies projected payrolls will fall due to significant layoffs in the next six months, and fewer firms projected a decline in workers through attrition.

Employment Outlook

The difference between those forecasting an increase in hiring and a decrease in payrolls resulted in a net employment outlook index of 36, the highest in the 12-year history of the association’s question.

Capital investment plans remained positive, while easing from the prior quarter’s survey. Fifty-three percent of the participants said they plan to boost spending on new equipment in the next 12 months, down from 62 percent.

Cost pressures are building. The share of firms reporting higher expenses for materials in the past quarter jumped to 63 percent, while none said they faced falling costs.

The share of businesses reporting higher wages in the past three months exceeded those who said they’d lowered pay, resulting in the biggest gap since October 2007.

More firms are trying to pass along the expenses. Thirty- five percent of respondents reported their companies charged higher prices in the past three months, up from 16 percent in the previous survey, while a smaller share said their prices fell. The difference led to a net prices-charged index of 29, the highest reading since April 2007, after 6 in the prior survey.

Seventy-two NABE members responded to the survey, conducted between March 16 and March 31. The National Association for Business Economics, founded in 1959, is the professional organization for people who use economics in their work.

To contact the reporter on this story: Shobhana Chandra at in Washington or

To contact the editor responsible for this story; Christopher Wellisz at

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