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Companies More Upbeat on U.S. Economy, NABE Survey Shows

Companies are growing more upbeat about the U.S. economy this year and plan to take on more workers as demand improves, a survey showed.

Some 78 percent of businesses, the most in a year, project the world’s largest economy will expand more than 2 percent in 2012, according to the National Association for Business Economics’ April survey released today in Washington. The share is up from 65 percent in the group’s January report.

About four in 10 firms, the most since July 2011, said they expect employment to pick up in the next six months, showing businesses are looking beyond higher oil prices and Europe’s debt crisis. At the same time, 66 percent said they expect no change in prices in the next three months, indicating Federal Reserve policy makers will have room to keep interest rates low to nurture the almost three-year-old expansion.

The survey shows “an improvement in economic conditions,” said Nayantara Hensel, chairwoman of the NABE outlook survey committee and professor of Industry and Business at the National Defense University in Washington. “Panelists are not significantly concerned about the potential impact of higher oil prices or the European crisis on their business.”

The April survey showed that 60 percent of the businesses, the most in a year, said their sales were rising. In January, 41 percent said demand was climbing. Some 83 percent of manufacturers surveyed said sales were increasing, indicating the industry is still powering the economy.

Employment Outlook

Thirty-nine percent of all companies surveyed from March 20 to April 10 projected job gains in the next six months. Eleven percent said employment will drop because of attrition, which suggests the labor market outlook may be more optimistic since such declines often occur when an employee is confident about finding another job, the report said.

Profit (SPX) margins are also improving at more companies, with 40 percent, the most in a year, saying earnings were increasing. In the January survey, 30 percent reported rising margins.

Companies indicated in the latest survey that materials costs may be less of a concern. Some 37 percent said input prices were rising. While up from 31 percent in January, the share is less than the 69 percent who said in July that materials were getting more expensive.

Cheaper costs may help explain why 66 percent expect no change in their prices in the next three months. Six percent, twice as many as in January, said they will fall 5 percent or less.

Fifty-five NABE members responded to the survey, which has been conducted quarterly since 1982. 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: Vince Golle at in Washington or vgolle@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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