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Economists say the U.S. recovery continued
during the second quarter of this year with more businesses hiring
workers and fewer cutting jobs, but the pace of growth has slowed,
a new survey shows.


      The National Association for Business Economics said its latest
survey, released Monday, found 31 percent of businesses added
workers between April and June, the highest level in three years.
And 39 percent of those surveyed say they expect to hire more
workers over the next six months - the most since January 2008.

Manufacturers reported the strongest increase in demand and
profitability. Finance, insurance and real estate sectors saw the
slowest growth.

      The number of respondents who think real gross domestic product
(GDP) will expand by more than 3 percent this year slid to 20
percent from the 24 percent who expected that rate of growth in
April. But sixty-seven percent of respondents still believe the
economy will expand by more than 2 percent in 2010.


      "NABE's July 2010 Industry Survey confirms that the U.S.
recovery continued through the second quarter, although at a slower
pace than earlier in the year," William Strauss, of the Federal
Reserve Bank of Chicago, said in a statement. "Industry demand
increased for a fourth consecutive quarter, although at a slower
pace. Price and cost pressures were contained, allowing profits to
edge higher. Credit and debt issues in Europe will likely
negatively impact just over a third of the surveyed firms over the
next three months."

      The number of companies reporting layoffs and job cuts through
attrition is down by half from a year ago and about steady with the
first quarter of this year, NABE found. 


Meanwhile, the number of
businesses hiring jumped to 31 percent from 6 percent at the same
time last year, and is up from 22 percent of those surveyed at the
end of the first quarter. Goods-producing companies are doing most
of the hiring, with only the services sector continuing to
anticipate layoffs, the survey said.

      The service sector remains a victim of weak consumer confidence.
A volatile stock market, 9.5 percent unemployment rate, lackluster
wage gains and a stalled housing market caused shoppers to clamp
down on their spending in May and June. An economic report released
Friday showed that consumer confidence fell in July to its lowest
point in nearly a year.


      Of the 84 NABE members from private sector and industry trade
associations that responded to the latest survey, 52 percent said
demand increased in the second quarter. Thirty-eight percent said
it remained steady. 


Companies that raised prices outnumbered
companies that cut them by three to one, which helped profit
margins edge higher overall. However, that growth "slowed to a
crawl," as materials costs continued to rise.

      While a quarter of those surveyed said their profit margins
grew, 21 percent said margins shrank - versus 11 percent reporting
declining margins in the first quarter. Companies with
overseas-based operations said sales growth abroad weakened in the
second quarter.


      Looking ahead, most of the economists say the eurozone's debt
crisis will have little or no effect on their business. However,
more than a third of those surveyed think Europe's credit woes,
austerity measures and the stronger dollar versus the euro will
moderately hurt growth.


      Spending on building is expected to decline, but nearly half of
companies say they plan to spend more money on computers and
communications equipment. That jibes with evidence from recent
earnings reports that show large corporations are buying more
computers. 


Chip maker Intel Corp. reported last week that companies
are feeling more confident about freeing up their technology
budgets and are starting to upgrade their workers' PCs.

      The NABE survey was taken between June 11 and June 29.

Gallery

Business and Economic News

Economists say the U.S. recovery continued
during the second quarter of this year with more businesses hiring workers and fewer cutting jobs, but the pace of growth has slowed, a new survey shows.

Economists say recovery continues, but pace slows

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