21 July 2009

Companies more optimistic on economy

Business forecasters in the U.S. are feeling a bit more optimistic about the future as they expect the economy to emerge this year from the recession.

The latest outlook from a quarterly survey released early this week by the National Association for Business Economics finds companies are still looking at job cuts in the coming months, though they may be scaling back.

Of those surveyed, 28% expect their companies to cut jobs through attrition or layoffs in the coming six months, the survey found, compared with 33% in April and 39% in January.

Some companies are even hiring. Of those surveyed, 18% expect their companies to start adding jobs in the coming months, the highest level in a year.

The industry survey “provides new evidence that the U.S. recession is abating, but few signs of an immediate recovery,” said Sara Johnson, NABE’s lead analyst on the survey and an economist at IHS Global Insight. Of those surveyed, 56% expect the gross domestic product to fall by 2% or more this year, while only 6% project economic growth.

The NABE’s survey of 102 forecasters at companies and trade associations occurred between 19 June and 1 July.

Even if the recession ends this year as the Federal Reserve and many private economists expect, companies most likely will continue trimming payrolls. The unemployment rate will climb because companies won’t be in any mood to hire until they feel certain a recovery is firmly rooted.

The Federal Reserve last week projected the national unemployment rate, currently at a 26-year high of 9.5%, will pass 10% by the end of the year.

For related information, go to www.isa.org/productivity.