WASHINGTON, July 21 (AFP): US companies remain cautious about the economy despite some signs of improvement as they battle rising costs and squeezed profit margins, a survey of business economists showed today.
The National Association for Business Economics (NABE) said its quarterly poll found a split on growth expectations for the world's biggest economy, an improvement over the first-quarter survey.
"Respondents to the July NABE Industry Survey were more varied than in the decidedly downbeat April survey about recent results and the next few quarters, but they were far from ebullient," Ken Simonson, chief economist of Associated General Contractors of America, said in a statement.
Of the survey's 101 respondents-economists at US businesses and industry associations -- 44 per cent forecast annual gross domestic product (GDP) growth above 1.0 per cent in the second half of the year. Forty-five per cent saw sluggish growth between zero and 1.0 per cent and 10 per cent expected a decline.
The US government estimated first-quarter GDP growth at 1.0 per cent; the initial estimate of second-quarter growth is due July 31.
Forty-five per cent of the panelists said they were more pessimistic about the outlook for the year as a whole compared with their views in April, while 13 per cent were more optimistic than before.
"More firms reported higher sales, but also higher materials costs and lower profits, in the second quarter than in the first quarter," Simonson said.
Firms' demand for goods and services surged 44 per cent in the April-June period, representing a sharp rebound from the April figures.
But at the same time a record 75 per cent of respondents reported higher materials costs in the past quarter, the most since the question was first asked in 1994, and expect to pay more in the current quarter, the NABE said.
Seventy-seven per cent of the panelists expect non-labor costs to increase in the current quarter.
At the bottom line, weakening US market conditions and soaring commodity prices continued to squeezing profit margins for a second consecutive quarter. Thirty per cent of respondents reported falling profit margins, nearly double the 17 per cent posting rising margins.
More than a third (35 per cent) of respondents said their firms raised prices in the latest quarter, the highest percentage since April 2007, the NABE said.
