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Companies in US plan to hire, spend into next year

“[The latest National Association for Business Economics survey] provides new evidence that the US recovery is under way.” — William Strauss, senior economist at the Federal Reserve Bank of Chicago

For the first time in a year, US companies are planning to boost payrolls and investments, indicating the nascent economic recovery will be sustained into next year, a private survey showed.

The percentage of businesses expecting to hire staff over the next six months exceeded the share projecting more firings by 4 points, the first positive reading since July last year, according to figures from the National Association for Business Economics (NABE) issued yesterday in Washington. The spread in favor of those looking to spend more on new equipment was even larger.

The survey “provides new evidence that the US recovery is under way,” William Strauss, a senior economist at the Federal Reserve Bank of Chicago who analyzed the results, said in a statement.

Companies are becoming more optimistic about the future after sales, prices and profit margins all firmed since the previous survey was taken in July, the report showed. The results may mean the worst employment slump since the Great Depression will soon end.

The service-industries group, which includes retailers, health-care providers, hotels and restaurants, had the most positive outlook on employment, followed by finance, insurance and real estate. On net, manufacturers said they planned more job cuts over the next six months, the report showed.

The US economy, the world’s largest, has lost 7.2 million jobs since the recession began in December 2007, and unemployment reached a 26-year high of 9.8 percent last month, according to figures from the Labor Department.

The share of companies planning to buy more equipment exceeded those anticipating investing less by 16 percentage points, the first positive reading since October last year, the NABE report showed. Services again led the advance.

The group’s net figures subtract the percent of respondents reporting falling results from those reporting an increase. A total of 78 members responded to the poll, taken from Oct. 2 to Oct. 12.

The sales gauge improved to a net 23 over the past three months, the first positive reading in five quarters, the report said. The group’s profits measure was greater than zero for the first time in seven quarters.

All 78 companies polled this month anticipated the economy will expand next year, with 73 percent saying the rate of growth will probably be in the 1 percent to 3 percent range.
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