US Economy Shows Signs of Stronger Recovery

We have now something to cheer about. The National Association for Business Economics (NABE) says that the U.S. economy is showing signs of an improving economy for the first quarter of 2011.

Conducted from December 17, 2010 to January 5, 2011, NABE‘s quarterly industry survey shows that more and more firms are becoming optimistic about the country’s economic future, thus, expressing positive hiring plans at a level not seen in over a decade. This means that there is improving labor-market dynamics.

The survey includes the views of 84 industry economists for private companies and trade groups and who are also members of NABE. The data are reported by broad industry group. Many results are expressed as Net Rising Index (NRI) – the percentage of panelists reporting better outlooks minus the percentage whose outlook is bleaker. The economists are more hopeful about overall economic growth since there are improvements in the state of the job market together with an increasing demand for companies’ products and services – a record high when you think about the start of the economic recession.

Shawn DuBravac, an economist of Consumer Electronics Association and a member of NABE, is confident about how industries are faring based on NABE’s Januray 2011 Industry Survey. He said that the underpinnings of the US economy continue to strengthen after analyzing the survey.

“Firms are showing greater optimism, with one in five respondents expecting economic growth between three and four percent. Firms are increasing their plans for future capital spending,” DuBravac 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. A majority, or 62 percent, of NABE panelists assumes real GDP growth of 2-3 percent in 2011, and one in five panelists is building business plans based on an outlook of 3-4 percent economic growth.

In terms of employment prospects, the survey shows a brighter future. Employment continues to improve with 34 percent of firms reporting larger workforces compared with only 13 percent in the previous year. The share of firms retrenching employees shrank from an average of 13 percent over the past three quarters to 6 percent at present. The current NRI is the highest level it has been since 1998. The hiring outlook for the next six months is more robust with 42 percent of respondents indicating their firms will be increasing employment, up from 39 percent last quarter and 29 percent in January 2010. The employment outlook NRI hit a 12-year high.

Only 6 percent expected their firms to cut back on capital spending, the long-term investment that creates crucial demand for big-ticket manufactured items. Most expected to invest more in the next 12 months.

More than half of those surveyed said they were selling to overseas markets. Within that group, 97 percent said foreign sales were increasing or unchanged.