Economists increasingly expect hiring to pick up in the second half of the year, even as overall growth is likely to slow.
In a quarterly survey by the National Association for Business Economists released Monday, 43 percent of respondents said their firms are likely to increase employment in the next six months, up 3 percentage points from a similar survey done in April and the highest number in a year.
What's more, none of the 73 survey participants said their firms planned significant layoffs, although 8 percent said they expected staff reductions through attrition, an uptick from 4 percent in the April survey. The manufacturing sector had the strongest outlook for more hiring, with transportation, utilities, information and communications next.
With high levels of unemployment among the biggest concerns in the economy, any forecast for increased hiring can be seen as a positive. Still, a larger portion of survey participants, 49 percent, said they didn't expect any change in their company's hiring, a factor that may have played in to their view that economic growth will slow through the end of the year.
The organization, which is made up of business economists and others who use economics in the workplace, said 76 percent of survey respondents expect greater than 2 percent growth in gross domestic product, down from 94 percent in April. The share that expect GDP growth at 2 percent or below swelled to 23 percent, from 5 percent three months ago.
"NABE's July 2011 Industry Survey indicates that the economic landscape is weakening and the recovery is softening," said Shawn DuBravac, chief economist for the Consumer Electronics Association. "The economic picture continues to be clouded by global uncertainties, including the disasters in Japan."
The July survey for the second time included a question on the impact of the March 11 earthquakes and tsunami in Japan, and more than a third of the economists said the disasters have led to increased costs, while 28 percent said their companies have lower sales expectations as a result. NABE said 48 percent of those surveyed lowered their GDP growth expectations in part because of the events in Japan.
The political upheavals in the Middle East also influenced results. As a result of the turmoil, 10 percent of respondents expect their input costs to be substantially higher this year, while 41 percent expect costs to be moderately higher. And 55 percent said the political shifts have led them to lower their expectations for GDP growth this year.
Among the survey's other findings:
- 23 percent of respondents say skilled labor is the most significant shortage their company faces, up from 17 percent in April.
- 56 percent saw rising sales in the second quarter, down from 63 percent in the first quarter. Just 8 percent reported falling sales.
- 29 percent said profits rose in the second quarter, while 51 percent said profits were unchanged and 20 percent said profits fell.
- 41 percent said their firms increased capital spending in the second quarter and 54 percent said their firms will spend more in the next year.
- 69 percent said materials costs rose in the last three months, up from 63 percent in April. That figure has risen steadily in the last five surveys, from 30 percent a year ago.
- 37 percent expect their firms to raise prices during the next three months, down from 41 percent in April.