US busi­nesses ex­pect sales re­bound and more hir­ing


U.S. busi­nesses ex­pect their sales will re­bound in the next three months af­ter a slug­gish first quar­ter, and they plan to boost hir­ing and pay, ac­cord­ing to a sur­vey re­leased Mon­day.

Just 49 per­cent of firms said their sales in­creased in the first three months of the year from last year’s fourth quar­ter. That’s down from 54 per­cent that re­ported higher sales in the last sur­vey, in Jan­uary.

Yet com­pa­nies are much more bullish about the April through June quar­ter. Nearly three-quar­ters of com­pa­nies fore­cast higher sales over the next three months, up from 68 per­cent in Jan­uary and just 54 per­cent in Oc­to­ber.

The re­sults sug­gest that weak growth in the first three months of the year may prove tem­po­rary. Harsh win­ter weather, la­bor dis­putes at West Coast ports that slowed ship­ping and a jump in the value of the dollar likely held eco­nomic growth to a 1 per­cent an­nual pace, or be­low, from Jan­uary through March. Yet most econ­o­mists ex­pect growth to ac­cel­er­ate in the sec­ond quar­ter.

“Growth in the first quar­ter ap­pears to be an out­lier within the broader eco­nomic out­look,” said John Sil­via, chief econ­o­mist at Wells Fargo.

Sil­via is also pres­i­dent of the Na­tional As­so­ci­a­tion for Busi­ness Eco­nomics, which con­ducted the sur­vey cov­er­ing 77 com­pa­nies in the sec­ond half of March. The com­pa­nies sur­veyed rep­re­sent a broad cross-sec­tion of in­dus­tries — in­clud­ing man­u­fac­tur­ing, con­struc­tion, fi­nance, ho­tels and restau­rants — with nearly half hav­ing more than 1,000 em­ploy­ees and a quar­ter hav­ing fewer than 10.

An­other sign of con­fi­dence in the eco­nomic out­look: The per­cent­age of firms that said they raised pay in the Jan­uary-March quar­ter soared to 45 per­cent, up from 31 per­cent in Jan­uary and 35 per­cent a year ear­lier.

And 46 per­cent plan to boost pay in the sec­ond quar­ter, a sign that the weak­ness in the first quar­ter hasn’t caused them to cut back on salaries. Still, the find­ing clashes with gov­ern­ment mea­sures of pay, which show that av­er­age hourly earn­ings have risen just 2.1 per­cent in the past 12 months. That’s the same slug­gish pace that has per­sisted since the re­ces­sion ended in 2009.

Just over a third of firms said they added work­ers in the first quar­ter, sim­i­lar to the per­cent­age that did so in the pre­vi­ous four quar­ters. And 41 per­cent ex­pect to hire more staff in the April-June quar­ter, up modestly from 36 per­cent in Jan­uary.

The sur­vey did find some weak spots. Com­pa­nies were much less likely to step up spend­ing on com­put­ers, industrial ma­chin­ery and com­mu­ni­ca­tions gear in the first quar­ter. Just 38 per­cent did so, down from 51 per­cent in Jan­uary and the weak­est show­ing in a year.

And the U.S. dollar’s rise in value has harmed some com­pa­nies. The Amer­i­can dollar is up about 28 per­cent against the euro in the past six months and 18 per­cent com­pared with Ja­pan’s yen. That makes U.S. ex­ports to Europe and Ja­pan more ex­pen­sive, and also makes prof­its earned from U.S. com­pa­nies’ over­seas op­er­a­tions worth less when trans­lated into Amer­i­can dol­lars.

Thirty per­cent of mem­ber com­pa­nies said the stronger dollar has hurt their busi­ness, while 62 per­cent said it had no ef­fect. But among man­u­fac­tur­ing com­pa­nies, two-thirds said it had a neg­a­tive ef­fect. Only 16 per­cent of ser­vices firms, which are much more fo­cused on the U.S. econ­omy, said the U.S. dollar has hurt their busi­ness.

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