Monday, July 23, 2007

More Jobs Expected

Business Economists Expect Stronger Hiring

Companies’ economists are more upbeat about hiring than they’ve been in more than a year, according to the latest
quarterly survey by the National Association for Business Economics.
About 41% of respondents said they expect their firms to add employees over the next six months, up from 29% in April and 31% a year ago. About 17% predicted decreases in employment through attrition or layoffs, while the rest expected no change.

The NABE industry survey showed stronger profit margins, hiring and capital spending in the second quarter compared to the first quarter and a better outlook for the economy in the months ahead. But companies also reported cost pressures that could start weighing on their results.

More than 40% of firms reported that wages and salaries rose in the second quarter, the second-highest reading since early 2000, and 40% reported shortages of skilled labor. Other costs also surged: About two-thirds of companies said materials costs are rising, twice as high as January’s levels. Some 60% expect non-labor input prices to rise over the next three months.

Despite higher costs, only 22% of firms said they had raised prices last quarter, marking the lowest percentage in four years. And about that many expect to do so in the third quarter. Yet industry profit margins have continued increasing for four years, and a key reason may be productivity, the NABE said. About 91% of firms reported productivity gains over the last year, due largely to technology improvements or investing in more productive capital.

– Sudeep Reddy
WSJ Econ Blog

No comments: