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Economy in Brief

National Association For Business Economics (NABE) Survey Shows Improvement
by Tom Moeller  January 24, 2010

NABE indicated in its latest Industry Survey that despite level demand throughout last year, most other economic conditions firmed. The index of unit demand improved sharply as 2010 began, but momentum waned as the year progressed. Nevertheless, as the percent of firms reporting higher demand rose moderately, the percent reporting lower demand fell sharply. The recovery in demand from the recession low necessitated more employment. The hiring index rose to its highest since 2006 as the percent of firms adding to payrolls surged. Capital spending plans improved in lockstep.

Gains on the product & employment side of firms' ledgers induced higher costs. By the end of the year, input costs had surged. Nearly half of firms faced higher and just a few reported falling costs. Despite higher costs, heightened competitive forces left firms with little ability to pass them along in the form of  higher prices. The prices charged index was roughly stable, at a low level, with 2009. Encouraging, however, was that despite weak pricing power, firms' profit margins jumped to nearly the series' high. Government numbers showing improved worker productivity had a real effect on firms' bottom lines. Part of the reason costs remained under control was the modest recovery in wages & salaries.

In just the goods producing sector alone, unit demand weakened more than the overall figures indicated and profit margins plummeted into negative territory.  

National Association For Business Economics Industry Survey Q4'10 Q3'10 Q2'10 Q1'10 2010 2009 2008
Conditions Over Last Three Months: Net Rising Index
  Unit Demand 42.7 46.5 42.0 51.5 45.7 7.3 -0.2
  Employment 27.7 17.8 17.3 8.8 17.9 -22.2 -3.4
  Capital Spending 32.1 25.4 10.8 9.8 19.5 -6.5 7.3
  Input Costs 41.4 31.3 20.0 32.6 31.3 5.5 37.0
  Prices Charged 6.3 -2.9 13.9 -1.5 4.0 2.8 16.8
  Profit Margins 20.5 20.3 3.9 13.1 14.4 -6.8 -23.5
  Wages & Salaries 12.5 11.4 14.1 19.7 14.4 -1.5 14.0
Goods Producing Industries
  Unit Demand 40.9 27.8 69.2 60.0 49.5 -15.0 -33.0
  Profit Margins -4.8 23.5 25.0 30.8 18.6 -18.9 -31.1
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