Jobs Outlook in U.S. Worsens

Business economists say fewer companies plan to hire, raise prices.

U.S. companies’ hiring plans reflect the worst employment outlook since January 2010 as demand slows in the world’s largest economy, a private survey showed.

Fewer companies project payrolls to rise in the next six months compared with a July survey, while more plan to cut workers, the National Association for Business Economics said today in Washington. The share of firms planning to raise prices was the smallest in almost two years.

Businesses are concerned about the European debt crisis, with 30 percent of participants anticipating it will cause a decline in sales through early 2012, the survey showed. While companies said they expect the U.S. will keep expanding, they trimmed projections for the pace of growth and pared capital spending plans, helping explain why the recovery has failed to gain momentum.

“Expectations are muted,” Shawn DuBravac, chief economist at the Consumer Electronics Association in Arlington, Virginia, who analyzed the results, said in a statement. The latest survey’s “respondents remain cautiously confident.”

Within the employment outlook, 29 percent of companies said they would increase hiring, down from 43 percent in July, while 59 percent reported they plan no change in staff, a 10-point jump. Twelve percent projected a decline in payrolls, up from 8 percent in the previous NABE survey.

The difference between those forecasting a rise in spending on new equipment in the next 12 months and those expecting a decrease resulted in a net index of 41, down from 50 in July.

Less Growth

The dimming outlook for employment and investment stems from the slowdown in growth. Eighty-five percent of companies surveyed said that the economy may expand 2 percent or less in the period ending this quarter compared with the final three months of 2010. In the prior survey, just one of every five economists polled predicted growth would be that slow.

The debt crisis in Europe already is hurting U.S. firms and is likely to continue, according to a special question in the latest survey, conducted between Sept. 20 and Oct. 5. Twenty percent of participants reported developments in Europe have led to as much as a 10 percent drop in sales so far this year.

The one bright spot in the survey was that inflation will subside. Twenty percent of companies expect prices to rise in the next three months, the smallest share in five surveys. Sixty-seven percent projected no change, up from 58 percent in the July survey, and a larger share of participants said they may cut prices. As a result, the net index fell to 6, the lowest since the second half of 2009.

Seventy NABE members responded to the survey. The National Association for Business Economics, founded in 1959, is the professional organization for people who use economics in their work.



Bloomberg News


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