26 Jan 2009
Jan. 26 (Bloomberg) -- More U.S. companies project they'll pare staff in the next six months as pessimism mounts the economy will contract this year, according to a survey by the National Association for Business Economics.The poll's net employment reading fell to a minus 22 this month, the lowest level since 2001, from minus 15 in the previous survey in October, the report showed today. More than three- fourths of the participants forecast the economy will shrink this year, twice as many as in the last survey.
Sales and profits are falling as rising unemployment causes American consumers to retrench, signaling companies will need to keep cutting payrolls and investments. Clogged credit markets and the slump in housing also threaten to extend the longest recession in more than a quarter century.
"The employment outlook for the next six months has weakened further," Sara Johnson, an economist at IHS Global Insight in Lexington, Massachusetts, said in a statement.
The NABE survey reinforces results from other reports that indicate the recession is worsening. The economy lost 2.6 million jobs last year, the most since 1945, and the government's monthly payrolls report may show employers cut another half million jobs this month, according to the median forecast of economists in a Bloomberg News survey.
President Barack Obama is pressing lawmakers to reach a consensus on an $825 billion stimulus plan that will reduce taxes, boost spending on infrastructure projects and save or create as many as 4 million jobs.
Spend Less
Executives across all four industries covered in the NABE survey said they planned to cut spending on new equipment in the next 12 months, led by manufacturers and financial and real estate firms, the survey showed.
Over half the survey participants said they expect the economy will shrink more than 1 percent in 2009, and only 3 percent predicted growth of 1 percent or higher.
Fifty-two percent of the executives said the credit crunch has hurt their business, and more than three-fourths reported that a lack of credit has affected their customers, the survey showed.
A new question in this month's survey showed more than half the participants were reducing inventories because they project weaker sales. Among the ones who were accumulating stocks, the majority were doing so unintentionally as sales had fallen faster than they anticipated.
Price pressures are disappearing as the downturn persists, the report showed.
One-third of the executives forecast prices will drop in the next three months, up from one out of five in the prior survey. Compared with October, fewer participants expected their firms would raise selling prices.
The survey, conducted from Dec. 17 to Jan. 8, included responses from 105 members of the business economist group.
