Growing confidence in the growth prospects of economy over the next year is resulting in companies hiring more. This is based on the findings of a recent survey involving business economists. Almost a third of the economists in the survey done by the National Association of Business Economics (NABE) responded that their respective companies have added jobs during the April to June quarter. This is the highest proportion claiming this in almost two years. There were 39 percent who expect their companies to hire even more in the six months to come. This is close to the two year high of forty percent seen in the January to March quarter. This increase in hiring occurred in spite of slowdown in sales and profit growth during the second quarter.

Optimism increased on the topic of future economic growth. A significant portion of the respondents, three-quarters, predict growth being around 2.1 percent or greater in the coming 12 months. This has gone up from the first quarter survey, released last April, which only saw two thirds expressing this expectation. These quarterly survey results reinforce the most recent data tracking of the economy. Although growth has been somewhat slow in the preceding nine months, employers have added jobs at a significant pace. Many economists are anticipating that this steady hiring will be a contributing factor to growth in the second half of 2013.

Study Findings

The NABE survey involved 65 member economists within the June 18 to July 2 timeframe. These economists work for companies in various industries including, but not limited to, transport and utilities, retail, manufacturing and finance. The study found that:

• An increase in sales at the companies for the second quarter was only suggested by 35 percent of the economists surveyed. A figure significantly lower than the 55 percent reported rise in sales found in through the first quarter survey. Fifteen percent of those surveyed actually responded that sales fell, an increase of 6 percent from the 9 percent seen in the first quarter.
• There was a reduction in profit growth with just 21 percent claiming an increase in profit margins for the last quarter. A figure reduced from the 29 percent seen in the first quarter.
• 19 percent said their companies were engaging in wage and salary increases, which is down from 31 percent seen in April and the lowest proportion seen since October.
• A rising minority claim that government tax increases and spending cuts were hurting their firms. 26 percent said their companies have been negatively impacted, a rise from the 16 percent seen in April. 74 percent claimed however that government policies were having no impact on their firms. This is down from the 79 percent seen in the preceding three months however.

Concerns

For the future, companies are said to be concerned about higher interest rates. This is in reflection of the increase in interest rates that transpired following the Federal Reserve Chairman, Ben Bernanke’s remarks in late May about the Fed slowing down its bond-buying program later in 2013. The purchases were intended to maintain low interest rates. The 10-year Treasury bond interest rate, which is used as a benchmark with influence on mortgage rates and other borrowing costs, has gone up by a percentage point to settle at roughly 2.5 percent as of May. 17 percent of the economists communicated that their biggest concern over the coming 12 months was the possibility of rising interest rates. In April that percentage was 4 percent. The largest concern, cited by a third of the participants, is the global economic health and its inevitable impact on U.S. exports.