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Economy in Brief

National Association For Business Economics Indicates Demand, Profits and Employment Improved
by Tom Moeller October 26, 2009

The National Association For Business Economics (NABE) indicated in its latest Industry Survey that U.S. economic conditions showed broad-based improvement during the last three months. That gain was paced by improvement in unit demand and profit margins.

The net percentage of firms reporting higher demand rose to 23.4% which was the highest level in over one year. The improvement came as 44.2% of firms indicated higher demand but only 20.8% showed demand falling during 3Q. That was down from nearly half reporting lower demand at the end of last year. Overall economic growth through the end of next year is expected to average 3%.

Higher net-profit margins were indicated by firms for the first time since the fourth quarter of 2007. Thirty-six percent of firms indicated higher margins, up from 10% during 4Q08, while a reduced 27% reported lower margins.

While still negative, net-employment improved materially as 12% of firms reported higher employment, double the low of last quarter, and a much-reduced 31% reported lower hiring.

With the improvement in economic conditions, NABE indicated that pricing power improved. The net-reading of 12% was the highest level in one year as 23% reported higher prices and a reduced 11% reported lower prices. Rising capital spending was indicated by firms for the first time in one year as 26% showed higher spending while a reduced 22% reported lower spending.

The NABE Industry Survey can be found in Haver's SURVEYS database.

Nat'l Assn. For Business Economics 3Q Industry Survey (Net Rising Index, %) 3Q09 2Q09 1Q09 4Q08
Unit Demand 23.4 -5.0 -14.3 -27.5
Profit Margins 8.7 -17.0 -30.4 -41.2
Employment -19.2 -30.0 -25.0 -29.8
Prices Charged 12.2 -12.9 -2.0 -9.0
Capital Spending 4.2 -23.6 -15.8 -26.0
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