A new survey has revealed that US corporations are less optimistic about sales and hiring in the third quarter, with poor European economic performance raising some serious concerns.
The survey, conducted by the National Association for Business Economics, revealed that 49% of industry and corporate economists said that sales at their firms rose from July through September, a drop from the 57% sales increase reported in the second quarter.
A total of 76 members were included in the survey, from September 22 to October 1.
Company and industry economists are less upbeat about future growth, only 54% expect sales to increase over the next three months, a drop from 59% in July.
The rate of hiring has also dropped, with 32% of respondents saying that employment at their companies went up, down from 36% in the previous survey. Only 31% said that they predict payrolls to increase this quarter, down from 37% in the last survey.
Despite annual job growth being better than last year, from 194,000 in 2013 to 227,00 this year, the pace of job growth has gone down significantly this quarter.
According to the NABE survey, wage gains were also moderate. 24% of economists reported wages and salaries at their companies rising over the past three months, down from 43% in July.
What has somewhat driven the pessimistic outlook is the eurozone’s lackluster economic growth, with 49% of economists surveyed stating that the region’s economic slowdown and the ECBs decision to cut interest rates to have a minor negative effect on their businesses, and 7% stating it would have a significant effect.
As the eurozone loweres interest rates, the dollar strengthens, which makes American exports more expensive.
Not everything was gloomy though, 43% of those surveyed said that they expect capital spending to rise this quarter – in line with the previous survey. The majority (57%) also said that they expect the economy to grow by 2.1 to 3% in the upcoming four quarters, 3 percent higher than in July.
NABE president John Silvia, chief economist for Wells Fargo, said:
“Business conditions continue to improve during the third quarter, albeit at a marginally subdued pace from that of the second quarter,”