Despite uncertainty in Washington and rising oil prices and interest rates, companies are upbeat on the prospects for economic growth in the next year, according to a quarterly survey of business economists.
But economists surveyed by the National Association for Business Economics weren't as optimistic about hiring, according to the survey released Monday. Only 27% reported rising employment at their firms from July through September, down from 29% in the second quarter. And 37% expected their companies to expand payrolls in the next six months, down from 39% in the second quarter.
The slower hiring occurred even as sales and profit margins grew during the third quarter, according to the survey.
Still, optimism about future economic growth remained strong last quarter. Almost 70% of the economists in the survey predicted gross domestic product growth of 2% to 3%, with another 19% expecting growth of 1% to 2%. The figures are nearly identical to those from the second-quarter survey, released in July.
The U.S. economy grew at a 2.5% annual rate from April through June, an improvement from the first three months of the year. But many economists worry that the growth rate may be slowing.
The NABE surveyed 60 of its member economists between Sept. 16 and Oct. 1, with most of the survey finished prior to the partial government shutdown that began Oct. 1. The economists work for companies from a variety of industries, including manufacturing, transportation and utilities, finance, retail and other services.
Among the findings:
- Sales growth accelerated in the third quarter. Forty-two percent of the economists reported rising sales at their companies, up from 35% in July. Only 12% reported falling sales, down from 15% in July.
- Profit margins also rebounded. One-third of the economists said margins were up at their firms, up from 21% in July and the highest percentage in more than a year. Those reporting falling profit margins fell to 19%, down from 25% in the second quarter.
- Only 16% of economists said their firms were raising wages and salaries, down from 19% in July and 31% in April.
- Most economists, 81%, said the Affordable Care Act had no impact on employment during the past three months. But a "sizable minority," 18%, reported a negative impact. And 22% expected a negative impact on employment in the next year, compared with only 2% expecting a positive impact. The responses also suggested a small shift toward more part-time and fewer full-time employees, according to the survey.
- Most economists, 80%, reported no impact on their businesses in the third quarter from rising long-term interest rates, according to the survey.
- But a quarter of the economists expect rising interest rates and increasing oil prices to drag on sales during the next 12 months.
- Twenty-five percent expect a negative impact from rising rates, but 62% expect no impact.
- Also, 25% of panelists expect rising oil prices to hurt sales in the next year more than in the past three months, but a majority, 64%, expects no impact.