NABE Panel: Continued Caution but Some Signs of Improvement
Author:
This NABE survey provides insights into these questions:
• How did business activity by sector in the second quarter of 2008 compare to the first quarter? What’s ahead? (pp. 3 and 12)
• Are costs for material inputs and labor still rising? Are firms achieving price and/or profit increases? (pp. 4-7)
• Are hiring and capital spending still rising? What is the outlook for the coming 6-12 months? (pp. 7-11)
• Will the housing bust continue? Will it have a widespread impact on other sectors? (p. 12)
• How are tightening credit conditions affecting businesses? Have the Fed’s initiatives made a difference? (pp. 12-13)
• How has the decline in the dollar affected businesses and what are their expectations for 2008? (p.13)
COMMENTS: “Respondents to the July NABE Industry Survey were more varied than in the decidedly downbeat April survey about recent results and the next few quarters, but they were far from ebullient,” said Ken Simonson, Chief Economist, Associated General Contractors of America. “More firms reported higher sales, but also higher materials costs and lower profits, in the second quarter than in the first quarter. Respondents were evenly split between those expecting the economy to grow by more than 1% or less in the second half of the year; only 10% expect the economy to shrink between now and December. Yet, nearly half said they had become more pessimistic than in April about the year as a whole. A record 75% paid more for materials last quarter and expect to pay more this quarter, as well. Hiring plans for the next six months are cautious, although slightly more firms plan to add jobs than cut them. Capital spending plans were nearly unchanged from April, with more firms planning increases than cuts in capital spending. Most firms expected a continued housing slowdown but fewer expect it to be substantial. More respondents than in the past two surveys said tighter credit market conditions have affected their business, negatively for the most part.”
