By Steven K. Beckner

(MNI) – The National Association for Business Economics’ January
Industry Survey, findings of which were released Monday, yielded an
upbeat appraisal of economic conditions and prospects.

The NABE survey of 84 of its members found increasing demand for
goods and services, widening profit margins and increased hiring and
capital spending.

Business economists were more optimistic about their companies
future sales.

The survey, conducted between Dec. 17 and Jan. 5, also showed
greater pressure on firms’ input prices or costs.

In summarizing the survey results for the NABE, Shawn DuBravac of
the Consumer Electronics Association said it “confirms that the
underpinnings of the U.S. economy continue to strengthen.”

“The number of firms expressing positive hiring plans is at a level
not seen in over a decade — a sign of improving labor-market dynamics,”
said DuBravac. “Supporting these hiring plans, industry demand continues
to move higher, and profit margins are expanding.”

What’s more, “firms are showing greater optimism, with one in five
respondents expecting economic growth between three and four percent,”
DuBravac continued. “Firms are increasing their plans for future capital
spending.”

He said “a majority of respondents anticipate no increase or
decrease in investment spending or employment in response to new tax
policies, suggesting business decisions are being driven by the
fundamentals of an improving economy.”

The NABE provided the following survey highlights:

* “Industry demand increased for a sixth consecutive quarter during
the final three months of 2010. About 55% of survey panelists reported
rising demand versus 12% reporting falling demand. All four major
industry sectors experienced demand growth.

* “Expectations for economic growth have improved significantly.
Over the last quarter, NABE panelists have become more optimistic. A
majority (62%) assumes real GDP growth of 2% to 3% in 2011, and one in
five panelists is building business plans based on an outlook of 3% to
4% economic growth.

* “Profit margins expanded for a sixth quarter in a row as 38% of
panelists reported that margins rose at their firm, versus 18% who
reported declining profitability. The nearly 21-point spread between the
two responses was the highest since the fourth quarter of 2005.

* “Employment continues to improve, with 34% of firms reporting
larger workforces compared to only 13% a year ago. The share of firms
cutting jobs shrank, from an average of 13% over the past three quarters
to 6% currently. The current NRI is the highest level it has been since
1998. The hiring outlook for the next six months also looks more
robust42% of respondents indicated their firms will be increasing
employment, up from 39% last quarter and 29% in January 2010. The
employment outlook NRI hit a 12-year high.

* “The share of firms increasing their capital spending from the
previous quarter rose slightly from the prior survey to 38%, while only
6% of panelists reported cutbacks in their firms. Expectations for
future capital spending improved significantly, with 62% of respondents
reporting higher planned expenditures, up from 48% last quarter.

* “Materials costs continue to rise. The percentage of respondents
reporting rising prices outpaced that of respondents reporting price
declines, but not to the percentage highs seen in 2008.

* “As for the expected impacts of the proposed 2011 tax package,
more than half (53%) of the panelists, especially those from the
goods-producing sector, anticipate a favorable impact on their firm’s
sales. In contrast, a majority of the respondents (60%) said they do not
anticipate any increase or decrease in investment spending or employment
in response to new tax policies.

* “More than half of the respondents indicated that some portion of
their firms’ sales came from foreign-based operations, with 14%
reporting that more than half of their sales were from foreign sources.
Of those with sales from foreign operations, 44% indicated their share
of sales from foreign sources increased in the last quarter, while only
2% reported they decreased.”

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MAUDS$,M$$BR$]