Economists Optimistic Even As Sales Growth Slows

Former Editorial Director at Entrepreneur Media
2 min read

Businesses saw the pace of sales growth slow in the second quarter, while margins tightened for the first time in four years, according to the July survey of the National Association for Business Economics.

Still, economists surveyed didn’t change their outlook that U.S. gross domestic product will grow at more than 2 percent over the next 12 months.

NABE calculates sales growth through a net rising index, or NRI, which takes the percentage of its members reporting rising unit demand and subtracts the percentage reporting falling demand. Overall, the NRI in the latest survey fell sharply to 20, from 47 in the first quarter. In all, just 35% of the companies surveyed reported any rise in sales.

Margins were also disappointing. Only 21 percent of companies polled reported a rise in profit margins, marking the worst reading since 2009.

The outlook on hiring remained stable. According to NABE, 39 percent of the survey respondents expect employment at their companies to rise over the next six months. That was on par with the 40 percent who said the same thing the prior month. Only 3 percent expect to have significant layoffs, which has been consistent for the survey results over the past year.

Business economists polled continued to list the state of the global economy, government spending cuts and more regulations as their top worries. But the latest survey also saw a jump in rising interest rates as a concern -- likely driven by recent indications by the Federal Reserve that it will back off some of its stimulus.

Related: Modest Rise in Retail Sales Could Signal Slowdown in U.S. Economy

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