NABE: Sales, Hiring Expectations Muted for 3Q


Businesses are expecting slower sales and growth expectations in 2011 causing them to hold off hiring in the next six months, according to a recent survey from the National Association of Business Economi

In its quarterly industry survey of 70 corporate economists, the NABE found that businesses are scrapping hiring plans as they brace for continued slow growth. Nearly 29% of respondents reported they expected to increase payrolls, down from 43% in July, when the second-quarter data was released. Those that reduced headcount rose to 13% from single digits.

Plans for expansion have also been placed on hold by many business owners, as skilled laborers continue to be in high demand. Seventeen percent of respondents said they are struggling to find  skilled workers in finance, insurance, real estate and service sectors.

The survey also found that 49% of respondents experienced sales increases in the third-= quarter, versus 13% reporting falling sales. The service sector is having the hardest time recovering: it reported the biggest drop in sales.

"The survey indicates companies are still building for an improving future. The number of firms adding employees dropped in October, but there are still more firms looking to add jobs than to cut them, " Shawn DuBravac, chief economist for the Consumer Electronics Association, said in a statement. "Capital spending also increased for a ninth consecutive quarter. Despite a narrowing of positive indicators, the majority of respondents remain cautiously confident.”

NABE panelists are also changing their predictions for the year to come: 84% of panelists now expect real gross domestic product to advance at a pace of 2% or less from the fourth quarter of 2010 to the fourth quarter of 2011. This is a major shift from July's number, when only 23% were expecting this slow of economic growth.

Firms are not raising sale prices, according to the survey. One-quarter of firms raised selling prices last quarter, which is down from roughly one-third of firms in the previous quarter. The European debt crisis is also having impacts on U.S. firms, with 20% of respondents reporting a decrease in sales-to-date in 2011 due to the developing situation. Additionally, 30% of firms expect the crisis will lead to a decrease in sales through the first quarter of next year.

The outlook for employment was also grim. The share of firms that are predicting they will add employees over the next six months fell to the lowest level since October 2009 and January 2010, the two quarters immediately following the recession. The share of firms expecting to cut employees through attrition or layoffs grew to its highest level since July 2010.