Business Survey Suggests Bullish Outlook

The results were reported by the National Association of Business Economists (NABE) in the April Business Conditions Survey. The NABE surveyed a panel of 77 of its own members and other “selected” industry economists in the final two weeks of March, and the responses reflect first-quarter 2015 results and the near-term outlook.

The share of economists who said business growth rose in the quarter came in at 50%, compared with 54% who reported growth at the end of the prior quarter. However, 71% of all survey panelists and “a large majority” of panelists from each industrial sector expect better sales in the second quarter. NABE president John Silvia, chief economist at Wells Fargo, said:

Over the past three months, the prices of crude oil and the dollar have not had a material impact on the outlook for the majority of respondents’ firms. Due to unusually harsh weather and dock strikes on the West Coast, growth in the first quarter appears to be an outlier within the broader economic outlook.

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The share of respondents report rising wages and salaries rose to 45%, compared with just 31% at the end of the fourth quarter of 2014. There was also an uptick of a point, from 34% to 35%, in the share of respondents reporting increased employment in the first quarter. In the first quarter of 2014, 28% of respondents reported increased hiring.

Some 19% of survey panelists said their firms continue to have difficulty finding skilled labor, and 57% said there was no difficulty filling open positions. The NABE notes that “a tighter job market is becoming more evident.”

While the NABE did not make the point, what that may mean is higher wages as employers have to compete harder for the skilled employees they want. Depending on one’s point of view, that may be a bad thing (higher costs to business owners, inflationary) or a good thing (increasing consumer spending power).

Just over half of respondents said that the massive drop in crude oil prices did not have a material effect on their businesses. One in five said there had been a negative impact, and nearly one in three said the decline had a positive impact.

Likewise, the slowdown in China’s economy had no impact on three-quarters of respondents, and the added strength of the dollar had no material effect on 62% of those surveyed. If the Federal Reserve should raise interest rates, nearly half of respondents (49%) said it would have no material impact on their businesses.

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