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Economists predict slower economic expansion, hiring pace slows: NABE

April 29, 2019

Economists expect economic expansion to continue within the next 12 months, according to a Business Conditions Survey released today by the National Association for Business Economics.

However, barely half of the panelists surveyed, 52%, foresee growth in real gross domestic product to expand by more than 2%, down from 67% of respondents who expressed that view in NABE’s January survey. The share of respondents expecting slower growth at or below 2% increased to nearly half from about one-third in the previous survey.

“More panelists report rising sales and higher profit margins at their firms over the past three months than in the previous survey,” said NABE Business Conditions Survey Chair Sam Kyei, chief economist at SAK Economics LLC. “At the same time, materials input costs remain elevated at respondents’ firms, especially goods-producing firms.”

The April NABE survey included responses from 116 of the organization’s members and was conducted between April 1 and April 10.

The April survey results also indicate firms continue to hire workers; however, hiring was less widespread in early 2019 than in the previous four quarters. Twenty-eight percent reported employment at their firms has been rising over the past three months, down from 35% in January’s survey and 36% in the April 2018 survey; 65% reported employment was unchanged while 6% reported it was falling.

More than half of survey respondents, 52%, reported shortages of skilled labor at their firms, close to the 53% reported in a similar survey in January but down from 45% in a year-ago survey. The report found current tight labor market conditions continue to push firms to raise wages, increase training and consider additional automation.

The new survey also found 18% of panelists reported no difficulty in hiring and 15% report no open positions, down modestly from 22% and 19% respectively in the January survey. Respondents reporting no open positions are concentrated in the services sector.

For respondents reporting difficulties in hiring, the positions that are most difficult to staff are high-skill positions, cited by 78% of respondents, followed by mid-skill positions, cited by 49%.

Raising wages remained the most common action to address staffing difficulty, cited by 46% of respondents, closely followed by 41% reporting that their firms are training internal staff for promotion. These two actions are the ones most often used regardless of sector. However, goods-producers tend to use multiple options more than other industries do to address hiring difficulties, with 50% lowering work requirements, 60% raising wages, 60% investing in labor-saving processes and 70% training internal staff.

NABE is a professional association for business economists and others who use economics in the workplace.

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