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More Bad News for Economy — NABE

Douglas A. McIntyre

Add another ominous sign to the current and probably near-term future of the U.S. economy. A string of data about the level of confidence among companies in the private sector, which appeared strong from the early part of 2013 to mid-year, has gone into reverse. The second-half growth rate has started to look much worse than the that already posted for the first half.

New research data from the July 2013 NABE Industry Survey report shows:

Sales growth decelerated during the second quarter of 2013 as the net rising index (NRI) -- the percentage of panelists that reported rising unit demand minus the percentage that reported falling demand -- declined to 20. The measure had jumped to 47 the previous quarter after holding steady at 22 throughout the second half of 2012. Just over a third of respondents -- 35% -- reported rising sales at their firms, down from 55% in April and only slightly below percentages seen the three previous quarters. Meanwhile, 15% of panelists reported falling sales, up from 9% in the previous survey but equal to the share reported in January 2013.

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Although many of the companies surveyed expected near-term hiring, capital spending activity dropped, and profit margins contracted for a large portion of those questioned. It would not be logical to believe that future drops in margins will not yield new layoffs, or at least a sharp drop in employee additions.

Surveys that represent the views of large numbers of companies should trump those of the government or private sector economic research firms. Company executives sit closer to the reality of economic activity than those at arm's length do. And well-informed opinions about future activity are superior to those that look backward, like federal unemployment and gross domestic product numbers.

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Add the NABE Industry Survey results to those of other signs, like forecasts for future quarters made by public companies that have recently reported earnings, and the outlook for the second half of 2013 does not look promising.


The July 2013 NABE Industry Survey report presents the responses of 65 NABE members to a survey conducted between June 18 and July 2, 2013, on business conditions in their firm or industry and reflects second-quarter 2013 results and the near-term outlook

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