Worry Over Economy High in Purchasers’ Poll

The National Assn. of Purchasing Management said Tuesday in its 1990 outlook that a recession can be avoided next year, but purchasing managers expressed an unusually high level of concern about the economy in the year-end survey.

Reflecting the high degree of uncertainty, the corporate purchasing officers expressed more concern about the coming year than at any other time in the past 27 years.

Although those polled, by a ratio of more than 4 to 1, predict that 1990 will be better than 1989, the outlook is clouded by a risk of recession or a severe slowing of growth, higher labor costs and high interest rates.

Less than a third, or 31%, of the 300 executives surveyed in 50 states were satisfied or optimistic.

Despite the widespread concern, purchasing managers remain upbeat, expecting the year ahead to bring steady economic growth with little inflation.

“The exceptionally high level of concern about the economy is overshadowed by the overall forecast of growth, albeit moderate,” said Robert Bretz, chairman of the association.

The semiannual forecast by the influential trade group projected nominal economic growth of 5% before adjusting for inflation. And with inflation low, real growth could improve on the expected 1989 level of 2.2%.

“This is an extremely optimistic report,” Bretz said. “It clearly reflects a continued moderating trend in the rate of inflation.”

The trade organization said economic growth will continue to be spurred by “relatively strong exports” and higher capital expenditures.

Economic growth in the first half of 1990 is expected to be weak, with improved growth after that.

Capital spending is forecast to rise by about 7.2% in 1990, slowing from the 7.9% gain purchasers reported for 1989.

Purchasers predicted price increases for 1990 of only 1.6%, down from the average gain of 2.6% overall in 1989.

Purchasers who import believe that the dollar will be stronger in 1990 against the Canadian dollar, the British sterling, the Italian lira, the French franc and the Mexican peso.

But these members were divided in their views about the dollar’s strength against the West German mark, the Japanese yen and the South Korean won.

For the first half of 1990, the NAPM predicted continued growth in exports, with 54% of members forecasting a moderate gain, up from 38% last May.