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Economy in Brief

New NABE Survey Indicates Pace of Business Recovery Eases But Job Creation Improves
by Tom Moeller July 19, 2010

In their latest report, the Nat'l Association for Business Economics indicated that net industry demand increased during 2Q for the fourth consecutive quarter. There was a sign, however, of moderation in the rate of demand's expansion as the net rising index fell to 42.0. The decline was due to a slightly diminished 51.8 percent of firms indicating rising demand and an increased 9.9% reporting the it fell. During the last ten years there has been a 71% correlation between the NABE unit demand index and the change in real final sales to domestic purchasers.

Job creation nevertheless improved and the net rising index rose to 17.3. The improvement occurred as a higher 30.9% of firms reported a net-increase while a stable 13.6% reported a decrease in hiring.During the last ten years there has been an 83% correlation between the NABE employment index and the q/q change in nonfarm payrolls.

Pricing also improved with the net-rising index at its highest since 3Q 2008. An improved 20.2% of respondents indicated that prices charged rose and a diminished number indicated lower prices.During the last ten years there has been a 66% correlation between the NABE prices charged index and the q/q change in the CPI.

Also in the NABE report was an indication that capital spending plans improved to the highest level in two years while upward pressure on wages & salaries diminished somewhat. Profit margins also slipped as a diminished 24.7% of firms reported expansion but an increased 20.8% indicated a decline.

The figures from the latest NABE report can be found in Haver's SURVEYS database and the latest from the National Association for Business Economics can be found here.

Nat'l Association For Business Economics  Q2   Q1  2009 2008 2007
Unit Demand;  Net Rising Index 42.0 51.5 7.3 -0.2 22
Employment;  Net Rising Index 17.3 8.8 -22.2 -3.4 16.6
Capital Spending;  Net Rising Index 10.8 9.8 -6.5 7.3 20.3
Prices Charged;  Net Rising Index 13.9 -1.5 2.8 16.8 21.7
Profit Margins;  Net Rising Index 3.9 13.1 -6.8 -23.5 9.7
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