Industry Demand Still Increasing
Jul 21, 2010
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The National Association for Business Economics Industry Survey for July 2010 showed industry demand increasing for a fourth consecutive quarter in the latest survey period, but said the pace of growth appeared to weaken in the latest quarter.

The overall Net Rising Index (NRI) was at 42, down from a 51 high in April 2010. However, the NRI for the goods-producing sector was at 69. The index measures the percentage of firms reporting stronger conditions less the percentage reporting weaker conditions.

The NABE report showed job creation trends still improving, with a second quarter of net positive payroll gains. The percentage of firms increasing payrolls increased to 31% - which NABE called a dramatic increase compared to the 6% of one year ago. 14% of firms were cutting jobs in July 2010, down from 36% a year ago.

39% of respondents expect their firms to add employees in the next 6 months - the highest level of hiring intentions since January 2008.

The NABE report also said:

• Profit margins expanded for a fourth consecutive quarter, but growth slowed as the NRI slid to 4 in the July survey from 13 in April.

• About one out of four firms increased capital spending in the prior quarter, similar to the results over the past year. Expectations for future capital spending rebounded slightly, with 44% of respondents in the latest survey expecting increases in the next 12 months, compared with 41% in April.

• Materials costs continued to rise.

• Firms with foreign-based operations reported that sales growth from those operations weakened in the second quarter.

• 59% of firms reported that the European credit and debt crisis will have no effect on their firm; 35% indicated it will have a negative impact.

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