Fewer U.S. Firms Plan More Hiring

Only 27% of companies plan to add workers in the first half, despite outlook for pickup in growth.

Fewer companies in the U.S. plan to boost payrolls in early 2012 even as growth is projected to pick up, a survey showed.

The share of companies seeking to add workers in the next six months fell to 27 percent, the lowest in at least five quarters, and 64 percent said employment will not change, the National Association for Business Economics said today in Washington. Sixty-five percent of firms estimated the world’s largest economy will grow more than 2 percent this year, up from 16 percent in an October survey.

“The optimism reflects growth in the economy,” said Nayantara Hensel, chairwoman of the NABE outlook survey committee and professor of Industry and Business at the National Defense University in Washington. “But the optimism could change as there’s also uncertainty. That’s why we see a degree of caution on employment.”

An improvement in the jobless rate and retail sales going into the holiday season may have helped lift the outlook in the latest survey, she said. At the same time, employers were holding steady on hiring and investment plans given concern over Europe’s debt woes, efforts to trim the U.S. deficit and swings in the price of oil reflecting tensions with Iran, Hensel said.

The share projecting employment will increase was down from 29 percent in October and 42 percent in the January 2011 report. Eight percent said they will cut payrolls, down from 12 percent in the previous survey.

In the latest survey, taken Dec. 15 to Jan. 5, fewer participants also said they will pick up the pace of spending on new plants and equipment for the next 12 months. Fifty-three percent forecast a rise in capital investment, down from 60 percent in the prior survey, and 42 percent said it would stay the same.

While 29 percent of respondents projected sales would decrease in the next six months due to the debt crisis in Europe, 63 percent said it was unlikely to affect demand. Firms were about evenly divided over whether the failure of U.S. debt- reduction efforts would hurt their business.

A stable inflation outlook was among the bright spots in the report. About 55 percent of companies said materials costs were likely to remain little changed in the next three months, similar to the prior survey, and 71 percent of firms reported wages are holding steady.

Sixty-three 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.

 

 

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