SOURCE: BusinessWeek
More U.S. companies plan to boost payrolls as sales strengthen and the outlook for economic growth brightens, a quarterly survey of economists showed.
The percentage of businesses planning on increasing staff in the next six months exceeded the share projecting more firings by 21 points, up from 6 points in January, according to a survey by the National Association for Business Economics. Demand rose for the third consecutive quarter, and more respondents estimated the economy will grow faster than 3 percent this year.
“The U.S. recovery from the Great Recession continues, with business conditions improving,” William Strauss, a senior economist at the Federal Reserve Bank of Chicago who analyzed the results, said in a statement. Rising demand indicates “a better outlook for hiring,” he said.
About six out of every 10 respondents said sales increased in the first quarter, up from 45 percent in NABE’s January survey. A pickup in the labor market is needed to sustain the economy’s recovery and help repair the damage from the worst employment slump since the end of World War II.
Thirty-seven percent of those polled said they project an increase in hiring within the next six months, up from 29 percent in January, NABE said. Sixteen percent said they expected their firms to trim staff through attrition or major layoffs, down from 23 percent in the prior survey.
The NABE survey, taken from March 25 to April 10, included responses from 68 members of the business economists group.
Growth Outlook
Twenty-four percent of the respondents said they expect the economy will expand faster than 3 percent in 2010, up from 14 percent who forecast that pace in January. In the latest survey, fewer economists estimated growth will be less than 2 percent.
More firms, on net, said they increased capital spending in the first quarter. Even so, investment expectations cooled after improving for five consecutive quarters. Forty-one percent of firms said they forecast capital spending will rise in the next 12 months, compared with 43 percent in the January survey.
Credit conditions remain a hurdle for business. Forty-seven percent of the firms in the survey reported they were hurt by stricter borrowing rules, up from 35 percent in January.
Inflation is likely to remain contained as fewer firms expect to increase prices, the survey showed. The net reading for firms planning to charge more over the next three months dropped to 18 in April from 29 in January.
The group’s net figures subtract the share of respondents reporting falling results from those reporting an increase.
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