HIGHLIGHTS

The number of firms reporting rising employment relative to declining employment increased to a new high since the inception of the NABE Industry Survey in 1982. This follows on the heels of the previous quarter's increase. The outlook for employment also continues to improve–moving up slightly from the previous quarter and setting another record level. No survey respondents expect employment to decline in the next six months at their firms because of significant layoffs.
Sales increased for a third consecutive quarter, with 63% of April survey respondents reporting higher sales than last quarter–the largest percentage since 1994. Only 9% reported a drop in sales. All four major industry sectors experienced strong demand growth.
Expectations for economic growth in 2011 improved compared to those reported in the previous survey, with 94% of panelists now forecasting that real GDP will increase by more than 2%. A sizable proportion of panelists–nearly 40% –expect real GDP growth in excess of 3%.
At the same time, panelists anticipate that political turmoil in North Africa and the Middle East, and the earthquake in Japan, will cause inputs costs to rise, lower their firm's sales, and exert downward pressure on U.S. economic growth in 2011.
Profit margins continued to improve. Forty-five percent of survey respondents reported increased profitability, versus 15% who reported declines last quarter–the largest net positive response since 1983. Two of the four sectors (services and goods-producing) reported increases in profitability versus last quarter.
The share of respondents whose firms increased capital spending over the prior quarter held steady from the previous survey at 38%. The share indicating their firms decreased capital spending fell to its lowest level since the survey began in 1982, at only 3%. Expectations for future capital spending deteriorated following a sizable improvement in the previous quarter, but positive responses still exceeded negative ones by 53% to 10%. Expectations remained positive for future spending on both computers and communications equipment and on structures.
The April 2011 NABE Industry Survey results reflect building inflationary pressure in the U.S. economy. The survey recorded the highest percentage of respondents (35%) reporting an increase in pricing since the October 2008 survey. Price increases were especially prevalent in the goods-producing sector. Materials costs also continued to rise, with more respondents in all four sectors reporting that costs rose last quarter. The percentage of respondents reporting rising labor costs has jumped from 16% in the January 2011 survey to 35% in this survey. Expectations for future selling-price hikes and non-labor input costs also increased.
A series of special questions related to the disaster and recovery efforts in Japan found the quantifiable impact will be small for both the short and long-term, so uncertainty does exist among the respondents.

NABE is the premier professional association for business economists and those who use economics in the workplace. Since 1959, NABE has attracted the brightest minds and the most prominent figures in economics, business, and academia to its membership with highly-regarded conferences, educational and career development offerings, industry surveys, and its unrivaled networking opportunities. The NABE membership is organized into subject-oriented Roundtables including: Corporate Planning, Financial, Health Economics, International, Manufacturing/Industry,Small Business/Entrepreneurship, Real Estate/Construction, Regional/Utility, Technology and Transfer Pricing. Past presidents of NABE include former Chairman of the Board of Governors for the Federal Reserve System, Alan Greenspan, several former Federal Reserve Governors, and other senior business leaders.

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PR: Business economists cite strong job creation

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