IE 11 is not supported. For an optimal experience visit our site on another browser.

Businesses upbeat on economic growth, but hiring, not so much

Looking for work is a hard job. Business economists are optimistic about growth, but say hiring will remain sluggish.
Looking for work is a hard job. Business economists are optimistic about growth, but say hiring will remain sluggish.Mark Lennihan / AP

Despite uncertainty in Washington and rising oil prices and interest rates, companies are upbeat on the prospects for economic growth in the next year, according to a quarterly survey of business economists. 

But economists surveyed by the National Association for Business Economics weren't as optimistic about hiring, according to the survey released Monday. Only 27 percent reported rising employment at their firms from July through September, down from 29 percent in the second quarter. And 37 percent expected their companies to expand payrolls in the next six months, down from 39 percent in the second quarter. 

The slower hiring occurred even as sales and profit margins grew during the third quarter, according to the survey. 

Still, optimism about future economic growth remained strong last quarter. Almost 70 percent of the economists in the survey predicted gross domestic product growth of 2-to-3 percent, with another 19 percent expecting growth of 1-to-2 percent. The figures are nearly identical to those from the second-quarter survey, released in July. 

The U.S. economy grew at a 2.5 percent annual rate from April through June, an improvement from the first three months of the year. But many economists worry that the growth rate may be slowing. 

The NABE surveyed 65 of its member economists between Sept. 16 and Oct. 1, with most of the survey finished prior to the partial government shutdown that began Oct. 1. The economists work for companies from a variety of industries, including manufacturing, transportation and utilities, finance, retail and other services. 

Among the findings: 

  • Sales growth accelerated in the third quarter. Forty-two percent of the economists reported rising sales at their companies, up from 35 percent in July. Only 12 percent reported falling sales, down from 15 percent in July.
  • Profit margins also rebounded. One-third of the economists said margins were up at their firms, up from 21 percent in July and the highest percentage in more than a year. Those reporting falling profit margins fell to 19 percent, down from 25 percent in the second quarter. 
  • Only 16 percent of economists said their firms were raising wages and salaries, down from 19 percent in July and 31 percent in April. 
  • Most economists, 81 percent, said the Affordable Care Act had no impact on employment during the past three months. But a "sizeable minority," 18 percent, reported a negative impact. And 22 percent expected a negative impact on employment in the next year, compared with only 2 percent expecting a positive impact. The responses also suggested a small shift toward more part-time and fewer full-time employees, according to the survey. 
  • Most economists, 80 percent, reported no impact on their businesses in the third quarter from rising long-term interest rates, according to the survey. 

But a quarter of the economists expect rising interest rates and increasing oil prices to drag on sales during the next 12 months. 

Twenty-five percent expect a negative impact from rising rates, but 62 percent expect no impact. 

Also, 25 percent of panelists expect rising oil prices to hurt sales in the next year more than in the past three months, but a majority, 64 percent, expects no impact.