WASHINGTON (MNI) – The following are highlights from the October
2010 Industry Survey released Monday by the National Association for
Business Economics. It notes that business conditions continue to
improve, with an improved outlook for hiring:

* Industry demand grew for a fifth consecutive quarter, with 59%
of NABE survey panelists reporting an increase in demand at their
firmsthe highest percentage in five years. The share reporting demand
growth topped the share reporting a decline by a wide margin in each of
the four major industry sectors identified in the survey.

* More than half of the panelists indicated that some portion of
their firms’ sales came from foreign-based operations, with 16%
reporting that more than half of their sales were from foreign sources.
Of those who reported sales from foreign operations, 46% indicated such
sales increased in the last quarter, while 10% reported sales decreased.

* Expectations for economic growth in 2010 remain positive, but
expectations are much lower than in the past two quarters. All NABE
panelists again indicated business decisions are being made based on
expectations for positive economic growth (as measured by real GDP) in
2010. Fifty-four percent (54%) of survey respondents believe real GDP
will expand by more than 2%, down from 67% who held this view last
quarter.

* Profit margins expanded for a fifth quarter in a row as 39% of
panelists, the highest proportion thus far in the economic recovery,
reported margins rose at their firms. Nineteen percent (19%) reported
diminished profitability. The net rising index (NRI) of 20 was the
highest in nearly five years. The services, goods-producing, and FIRE
sectors all experienced solid gains in profitability, while margins in
the TUIC sector held steady.

* Job creation registered its third positive quarterly reading
in a row. The percent of firms shedding or planning to shed workers has
fallen substantially over the past year. Job creation trends are holding
steady at healthy levels. The employment expectations NRI was at its
highest level since 2006.

* The share of respondents whose firms increased their capital
spending over the prior quarter reached a two-year high of 37%. Nearly
half of respondents expect their firms to further increase capital
spending in the next 12 months. Expectations are highest for investment
in computers and communications equipment, but also turned positive on
balance for spending on structures for the first time in more than two
years.

* Materials costs continue to rise. The percentage of
respondents reporting rising prices outpaced that of respondents
reporting price declines. Labor cost pressures also continue to
increase, with respondents reporting the highest NRI in more than two
years. However, firms had difficulty passing on cost increases. Fewer
respondents than in the previous four surveys indicated their firms had
raised prices in the third quarter, and these respondents were
outnumbered, 17% to 14%, by those whose firms lowered prices. As in the
last survey, about one-fifth of respondents expect their firms to raise
prices in the coming quarter, whereas 8% expect price cuts.

* A majority of survey respondents expect regulatory policy and
federal taxes to have a negative impact on their companies’ performance
in the year ahead. Perhaps influenced by additional quantitative easing
expectations, a majority believe monetary policy will have a positive
impact on their businesses.

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

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