Mixed signals have come out of the latest survey from the National Association of Business Economists.
On the one hand, the percentage of companies expecting to hire more workers has hit the highest level in two and a half years.
The percentage of firms increasing payrolls increased to 31%—a dramatic increase versus a year ago when only 6% were seeing hiring gains. The percentage of firms cutting jobs continued to move lower—from 36% a year ago to 14% this July. The share of respondents expecting their firms to add employees over the coming six months rose to 39%, the highest level of hiring intentions since January 2008.
Yet at the same time, U.S. GDP growth estimates have been cut back overall.
Almost a third of companies now expect 2010 GDP growth of less than 2%, which given Q1’s 2.7% growth rate, implies that this subset of companies expects a substantial slow-down.
All NABE panelists again indicated business decisions are being made based on expectations for positive economic growth in 2010 (as measured by real GDP); however, only 20% of survey respondents believe real GDP will expand by more than 3% compared with 24% of survey respondents who expected that rate of growth in April. 60-seven per cent of respondents still believe the economy will expand by more than 2.0% in 2010.
All-in-all, while hiring intentions are rising, the case still stands that most companies (60%) don’t intend to add staff, and GDP forecasts have been trimmed back most recently. NABE also reported that while capital spending intentions are rising from low levels, the majority (56%) still doesn’t intend to increase capital investment right now.