Industry economists say the U.S. economic recovery is gaining strength, with more firms expressing positive hiring plans than in over a decade.
A new survey from the National Association for Business Economics finds that economists are more hopeful about overall economic growth, the job market and demand for companies' products and services by many measures than they have been since the start of the Great Recession.
The survey found that business decisions are now "being driven by the fundamentals of an improving economy," said Shawn DuBravac, an economist with the Consumer Electronics Association who analyzed the findings.
The quarterly survey includes the views of 84 economists for private companies and trade groups who are NABE members. The data are reported by broad industry group. Many results are expressed as Net Rising Index, or NRI — the percentage of panelists reporting better outlooks minus the percentage whose outlook is bleaker.
The number of economists who saw hiring by their firms increasing over the next six months was 42 percent, compared with 7 percent who expected to lay off workers. The NRI of 35 was the highest in the 12 years that the question has been asked.
However, more layoffs were expected in the transportation, utility, information and communications sectors.
That optimism followed increased hiring by the economists' firms during the quarter ended Dec. 31. About one-third of those surveyed said hiring had improved at their companies, compared with 6 percent who said workers were laid off. The NRI of 28 represented a 10-point increase over the previous quarter.
All major industry groups saw more demand for their products and services, the sixth straight quarter of positive results. Demand grew by slightly less than in the previous quarter, but has held relatively steady since last spring, the NABE said.
Eighty-two percent of the economists expected the nation's economy to grow by two to four percent in 2011, up from 54 percent in October. The latest government data had the economy growing at a 2.6-percent annual rate in the July-September quarter.
Economists who saw their companies' profits grow in the final quarter of 2010 outpaced those who saw margins shrink by an NRI of 21 percent — the largest spread since 2005.
Only 6 percent expected their firms to cut back on capital spending, the long-term investment that creates crucial demand for big-ticket manufactured items. Most expected to invest more in the next 12 months.
More than half of those surveyed said they were selling to overseas markets. Within that group, 97 percent said foreign sales were increasing or unchanged.
The survey was conducted between Dec. 17 and Jan. 5.