Businesses to Increase Hiring, Capital Spending in First Half

U.S. businesses plan to increase hiring and capital spending in the first half of 2010, according to a recent survey conducted by the National Association for Business Economics (NABE).

NABE’s January 2010 Industry Survey provides new evidence that the U.S. recovery from the Great Recession continues, albeit at a slow pace,” says William Strauss at the Federal Reserve Bank of Chicago. “Industry demand edged higher from the October 2009 report, with an improved view towards growth in 2010. While input costs have been increasing, prices have also been moving higher, allowing profits to continue to improve. Job losses have been moderating with a slightly improved outlook for hiring over the next six months. Capital spending has continued to improve from very low readings following the start of the financial crisis. Improving credit conditions might be part of the explanation, with many respondents indicating that credit still remains tight but less so than in recent months.”

All respondents indicate that business decisions are being made based on expectations of positive economic growth in 2010, as measured by real GDP. Sixty-one percent of survey respondents believe real GDP will expand by more than 2% in 2010. That figure is up from October’s 5%.

The share of respondents expecting their firms to add employees over the coming six months rose to 29% from 24%. Expectations for future capital spending improved for a fifth straight quarter, with positive responses outstripping negative answers three to one. As in the past three surveys, expectations were positive for spending on computers and communications equipment but negative for structures.

The January NABE Industry Survey presents the responses of 75 NABE members to a survey conducted between Dec. 18, 2009, and Jan. 7, 2010.

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