You will be redirected back to your article in seconds
Skip to main content

Survey Sees Economic Recovery Amid Raw Material Shortages and Higher Prices

The July National Association of Business Economics (NABE) Business Conditions Survey showed most respondents continue to anticipate a strong growth trajectory for real gross domestic product (GDP), but prices were up and material shortages persisted.

The survey presented the responses of 93 NABE members on business conditions in their firms or industries, and reflects second-quarter 2021 results and the near-term outlook. Two-thirds of respondents anticipate real GDP to expand between 3 percent and 5.9 percent over the next four quarters.

“The results of the July NABE Business Conditions Survey show that conditions remained strong during the second quarter of 2021,” NABE president Manuel Balmaseda said. “Two-thirds of respondents report that sales at their firms increased in the second quarter of 2021, while only 3 percent indicate sales declined. In addition, most anticipate a strong trajectory for inflation-adjusted gross domestic product, or real GDP, through the spring of 2022.”

A record-high share of respondents reports that profit margins increased at their firms in the second quarter, added NABE Business Conditions Survey chair and chief economist Eugenio J. Aleman.

“At the same time, materials costs rose at a majority of respondents’ firms,” Aleman said. “Respondents continue to be optimistic about the near-term outlook for employment. A third of respondents reported their firms had added workers in the second quarter and an even higher share expects an increase in their workforce in the next three months.”

Related Stories

The net rising index (NRI) for profit margins–the percentage of panelists reporting rising profits minus the percentage reporting falling profits in the second quarter was the highest reading on record. All sectors registered positive NRIs, with the transportation, utilities, information, communications (TUIC) sector having the highest NRI.

The NRI for prices charged during the quarter declined, with respondents from the services and TUIC sectors indicate no price declines and those in the goods-producing sector reported an increase from the April survey.

The NRI for materials costs in the period increased from 49 the previous quarter and was the highest reading since the second quarter of 2018. Sixty-one percent of respondents report cost increases in the quarter, up from 54 percent in the previous period. NRIs for all sectors are positive in the July survey, led by the goods-producing secto.

Hiring accelerated in the quarter, resulting in the NRI for employment rising from 9 in the April survey to 28 in the July survey. Thirty-three percent of respondents cite increased employment at their firms, with 5 percent.

Investment continued to improve for more firms in the period, with 34 percent of respondents reporting capital spending rose for their firms and just 1 percent noting declining investment.

Forty percent of the panelists indicated that their companies are experiencing delays in receiving materials or other inputs, with respondents from the goods-producing sector accounting for the largest share holding this view.

Twenty-two percent of panelists indicated that their firms are passing along higher costs attributable to delays and shortages to customers. Seventeen percent of all respondents indicate that they are experiencing shortages, but not passing along the costs to customers.

Thirty-four percent of panelists anticipate that the increase in costs will only be temporary, with respondents from the goods-producing sector accounting for the largest share holding this view. Twenty-seven percent of panelists cite that their firms are not experiencing any significant cost increases.