The economy is still in a downturn. However, evidence that the recession is slowing exists in rising demand for products, increased consumer confidence, a slowing of nationwide layoffs, and more companies reporting profits.
The National Association for Business Economics (NABE), based on its latest quarterly survey, says that key indicators such as unemployment, capital spending, profit reports, and industry demand are still in decline, though the rate of decline is abating. The report follows similar statements made by the Federal Reserve last week. The Fed said that five of its 12 regional banks reported a slowing in the economic decline. The NABE survey, however, reported 93% of respondents expect the GDP to decline this year. That is 15 more pessimist outlook responses than in its previous survey in January. In the latest survey, fewer companies reported a decline in demand for its products than those reporting a rise in demand. From those two numbers, the NABE gets the net rising index for industry demand, which improved from -28 to -14 from the Jan. survey to the latest one.
The January figure was the worst in the survey's history going back to 1982. Some industries, finance, real estate, services, and insurance actually reported positive net rising indexes. Others such as information and communications, transportation, and utilizes remained in decline.
Profit margins are also on the rise for many companies. In the latest survey, almost 15% of respondents claimed rising profits and 46% said profits were falling. The remaining respondents reported no change, making the net rising index -31%, up from January's -42%, when 11% of respondents reported a rise in profits and 51 reported declines. A key indicator for business growth, capital spending, improved as well. 16% of respondents reported raising capital spending, while 32% cut back and 52% reported making no change.
Remaining low are employment prospects and wages, which are at their lowest since the survey's inception. The survey had 15% of companies report a rise in employment, unchanged from the Jan. survey, and 40% experiencing a drop in employment, 4% lower than in Jan. Hardest hit was the goods-producing sector, which saw 82% of it's companies reporting job losses and none reporting growth. Meanwhile, the financial, real estate, and investment sectors reported stabilization. The future for jobs looks shaky with many experts expecting job losses to continue. Only 15% of companies expect to create new jobs, which is slightly worse than the 16% planning new hiring in the Jan. survey. The number of companies planning job cuts, however, from 40% to 34%. Search La Jolla Real Estate today.
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