More U.S. companies plan to hire and buy new equipment during the next six to 12 months even as the recovery shows signs of cooling, according to a quarterly survey of economists.
The percentage of businesses expecting to hire in the next six months exceeded the share projecting leaner payrolls by 25 points, up from 21 points in April, according to a survey by the National Association of Business Economics. The share expecting capital spending to advance also outpaced those forecasting a decline by 25 points.
While the economists forecast improvements in the labor market and business investment, they lowered their estimates for economic growth after sales gains slowed in the second quarter. The share of respondents forecasting growth below 3.1 percent increased to 79 percent from 75 percent in April.
“The U.S. recovery continued through the second quarter, although at a slower pace than earlier in the year,” William Strauss, a senior economist at the Federal Reserve Bank of Chicago who analyzed the results, said in a statement. “Industry demand increased for a fourth consecutive quarter, although at a slower pace” and lower costs allowed profits to “edge higher,” he said.
Fifty-two percent of respondents said sales increased in the second quarter, down from 57 percent in NABE’s April survey. Those reporting higher profit margins held at 25 percent and the share of respondents who said prices were unchanged increased to 73 percent from 65 percent in April.
The NABE survey, taken from June 11 to June 29, included responses from 84 members of the business economists group.
Employment Gains
Thirty-nine percent of respondents said they expect employment to rise in the next six months, compared with 37 percent in the April survey. The share that said hiring increased in the second quarter rose to 31 percent, from 22 percent in April.
While the share of firms that said they boosted capital spending from April through June eased to 24 percent from 25 percent, those projecting they’ll boost investment over the next year increased to 44 percent from 41 percent in the April survey.
One measure that may restrain spending and growth is the European debt crisis. Thirty-five percent of respondents said they expect the crisis will have some negative impact on their business, though almost all of them estimated the result will be “moderate.”
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