The January 2014 National Association for Business Economics Industry Survey report presents the responses of 64 NABE members to a survey conducted between December 19, 2013, and January 6, 2014, on business conditions in their firms or industries and reflects fourth-quarter 2013 results and the near-term outlook.

“The outlook for 2014 is strengthening. Results from NABE’s January 2014 Industry Survey suggest that economic growth accelerated to a moderate pace during the fourth quarter of 2013 from its modest pace the previous quarter,” said NABE President Jack Kleinhenz, Principal and Chief Economist at Kleinhenz and Associates.

Respondents report that strengthened sales growth was more widespread during the last quarter of 2013 than in the third quarter. Profit margins increased at more firms as fewer panelists reported rising materials costs. More than 40% of respondents expect their firms to raise selling prices in the coming quarter—the highest percentage in more than a year. Employment growth remained weak, with a large percentage of panelists citing a continuing shortage of skilled candidates. The percentage of survey panelists who expect their firms to add workers or increase overall capital spending is virtually unchanged from that reported in the October 2013 survey.
 
“Panelists’ expectations for economic growth in the next 12 months are largely similar to those reported in the previous survey. Three-quarters of respondents forecast real GDP growth above 2%; 69% expect growth in the range of 2.1-3%, and none predicts growth will exceed 4%.
 
“A significant majority of survey respondents anticipate little material impact on business conditions from the implementation of the Affordable Care Act or from possible changes in the Federal Reserve’s accommodative monetary policy stance. On net, survey respondents are more optimistic in their economic outlook and, regardless of any changes in monetary policy, expect their firms’ performance in 2014 will be superior to that in 2013.”
 
Highlights

• Sales growth accelerated again during the fourth quarter of 2013. The net rising index (NRI)—the percentage of panelists who reported rising unit demand less the percentage who reported falling demand—rose to 53, an increase from the NRI of 30 recorded last quarter and the highest level since 2011. Sixty-three percent of respondents reported rising sales at their firms, the largest share in any survey over the past year. Only 9% of panelists reported falling sales, down from 12% in October.

• Profit margins increased for a second consecutive quarter. Thirty-four percent of panelists reported rising margins, comparable to the 33% who reported rising margins in October’s survey. More significantly, only 8% of panelists indicated their firms experienced falling profit margins compared with 19% in October. The NRI increased from 14 to 26, the highest index value over the last year.

• The NRI for prices charged declined from 23 in the October survey to 17 in January. One-fifth of all panelists reported that their firms charged higher prices over the fourth quarter of 2013, while only 3% reported their companies charged lower prices. The remaining 77% of respondents indicated that their firms’ prices did not change.