Survey Finds Optimism for ’89 Economy : Purchasing Managers Say Business Will Be Better

The U.S. economy is likely to do better in 1989 than it has this year because of growth in exports and capital spending, the nation’s purchasing managers said in a report released Tuesday.

Fifty-three percent of the purchasing managers surveyed felt their businesses would be better in 1989 than in 1988, compared to 13% who expected it would be worse, the National Assn. of Purchasing Management said. The rest thought it would be about the same.

The report is based on a survey of purchasing executives in more than 250 industrial companies in all 50 states.

“The exceptionally high level of optimism expressed by purchasing managers about the next 12 months overshadows their concerns regarding inflation, rising interest rates and the budget deficit,” Robert J. Bretz, chairman of the association’s Business Survey Committee and director of materials management at Pitney Bowes Inc., said in a written statement.

“Overall, they’re expecting a continuation of a very healthy growth throughout all of 1989, perhaps heavier in the first half than the last half,” Bretz said in an interview.

Top Concerns

On inflation, 87% predicted that their companies would be paying higher prices at the end of 1989 than at the end of 1988, and of those, the average inflation forecast was 4.2%. Seven percent predicted lower prices, with an average forecast decline of 2.4%.

The association said the combination of answers on inflation translated into a prediction of a net average price increase of 3.7% in 1989. The managers expect a net average price increase of 5% for this year.

Members reported their companies were operating at the highest percentage of capacity since May, 1979. The 76% who said 1988 fully measured up to their expectations was the most to say so since 1978.

The top three concerns mentioned by the purchasing managers were inflation, cited by 22%; rising interest rates, 14%, and the federal budget deficit, 13%.

On capital expenditures, 42% said they expected to spend more in 1989, and 24% said they expected to spend less.