TheJanuary NABE Industry Surveyindicates that recovery in the U.S. economy is continuing, albeit at a slow pace, and firms interviewed in the survey anticipate adding employees or increasing capital investments over the next six months.
“Industry demand edged higher from the October 2009 report with an improved view towards growth in 2010,” says William Strauss of the Federal Reserve Bank of Chicago in a press release. “Job losses have been moderating with a slightly improved outlook for hiring over the next six months. Capital spending has continued to improve from very low readings following the start of the financial crisis.”
The number of firms that increased capital spending over the prior quarter dipped in January’s survey after rising sharply from July to October. Expectations for future capital spending improved for a fifth straight quarter-positive responses trumped negative answers by a three to one ratio. Like the three previous surveys, expectations were positive for spending on computers and communications equipment but negative for structures.
The NABE report indicated that job losses continue to slowly abate, with the percentage of firms cutting payrolls falling to 28% from 31% in the October survey. The percentage of firms adding jobs edged higher to 13%. The share of respondents expecting their firms to add employees over the coming six months rose to 29% from 24%.
Other highlights from the NABE report include:
• Industry demand, including the goods-producing and service sectors, increased for a second consecutive quarter.
• The majority (61%) of survey respondents believe real GDP will expand by more than 2.0% in 2010, up from 45% of respondents in October.
• Profit margins grew for the second consecutive quarter, though the degree of improvement remained modest.
• Only 8% of respondents reported that their firms had cut prices last quarter, compared with 22% that had raised prices. Expectations for price increases in the coming quarter out-ran expected price cuts by 29 percentage points.
• The percentage of respondents noting rising prices outpaced that of respondents reporting price declines. Labor costs remain subdued, with only 12% of respondents reporting rising compensation.
• A large but declining share of respondents indicated that credit conditions had a negative impact on their businesses during 2009’s final quarter, compared with the prior period. In addition, the number of panelists reporting a positive impact from credit conditions also increased.