The National Association of Business Economics released its quarterly survey of its members' take on the state of the current and future economy today.
Given that the survey only had 112 responses, it's probably not a good idea to generalize too much about its results. That didn't stop The Hill from headlining Vicki Needham's writeup by far too optimistically declaring that "Business leaders expect strong finish to 2015." In an upset, possibly indicating that today's scheduled koolaid delivery intended for the Associated Press got misdirected to and doubled up at the Hill's offices, the wire service's Christopher Rugaber — looking at the same survey — wrote that "U.S. businesses' outlook on sales in the coming months has darkened."
Again emphasizing that making general assessment based on survey answers from 112 companies, about half of which are said to employ over 1,000, Rugaber's take is clearly the more accurate of the two.
First, here are several paragraphs from Needham's over-the-top report at The Hill (bolds are mine throughout this post):
Business leaders expect strong finish to 2015
Business leaders expect robust growth through the rest of 2015 although they are slightly less optimistic than earlier in the year.
... A July survey from the National Association for Business Economics (NABE) showed Monday that 59 percent expect sales will rise during the July-September quarter, a drop from the 71 percent in April who expected second-quarter sales to increase.
Meanwhile, 46 percent of respondents in the July survey reported rising sales at their firms in the April-June quarter, less than the 49 percent in April and 54 percent in January.
... Four out of five respondents expect growth between 2.1 and 4 percent from the second quarter of 2014 to the second quarter of 2015.
There isn't enough information in Needham's report to tell whether or not the "robust growth" characterization is accurate. A look at the survey's detail indicates that it's not. The percentage of respondents expecting annualized growth to top 3 percent during the next 12 months, the absolute bottom anyone should use to even try to describe growth as "okay" (I think that the benchmark should be at least 4 percent, and that anything short of 3 percent is unacceptable), dropped by almost half from 29 percent in April to 16 percent in July. 20 percent expect growth of 2 percent or lower, up from 11 percent in April. That's a pretty significant deterioriation in expectations, not just a "slight" one.
The AP's Rugaber was far more dreary, and he found support in the NABE survey for his claims:
SURVEY: US COMPANIES LESS OPTIMISTIC ABOUT FUTURE SALES
U.S. businesses' outlook on sales in the coming months has darkened after sales growth slowed in the second quarter, according to a survey released Monday.
More companies also expect to cut back on their investment in equipment and buildings in the July-September quarter, the survey found. However, hiring and wage and salary increases are likely to continue at about the same pace in the third quarter as they did in the previous three months. The overall survey results, compiled by the National Association for Business Economics, portray an economy muddling along at a steady, if tepid, pace.
Fifty-nine percent of businesses expect their sales to grow in the next three months, down from the 71 percent who forecast sales growth three months ago from the 68 percent who projected growth in January.
The relatively pessimistic outlook may reflect that sales growth was not nearly as widespread in the second quarter as many companies hoped. Just 46 percent of firms said their sales rose in the April-June quarter, down from 49 percent in the first quarter and 54 percent in the final three months of last year. And 18 percent said sales fell, the most in more than a year.
Gosh, after the serially described absolutely awful winter the press and pundits have used as the go-to excuse for how bad the first quarter was, you would have thought that second-quarter sales would have taken off like a rocket.
But the NABE respondents are saying that didn't happen. In broader terms, as I have shown in several previous posts, year-over-year wholesales sales, factory shipments, and factory orders in the economy as a whole are down, while inventories remain historically high. No wonder survey respondents are cutting back on capital expenditures; they need to preserve cash.
If you're wondering how Needham and Rugaber could look at the same survey and reach virtually opposite conclusions, you're not alone. Maybe things will return to normal and both writers will go back to their customary sunnyside-up reporting when the koolaid delivery situation gets straightened out.
Cross-posted at BizzyBlog.com.
