Nation’s Purchasers See Economy Gaining Steam

The nation’s purchasing managers expect the economic expansion to accelerate in the latter half of 1992, and the majority of those responding to a poll released Tuesday do not expect further layoffs.

The National Assn. of Purchasing Management, which is holding its annual conference in Orlando, Fla., said managers anticipate improvement by a margin of 6 to 1.

The group expects sales to increase an average 5.1% for the year. Adjusting for inflation--which the managers peg at 0.8% for the year--would put real growth at between 2.5% and 3%.

“It’s clearly good in the sense that it’s better than what we’ve seen through this recession and the past few years,” said Robert Bretz, director of corporate purchasing for Pitney Bowes Inc. and chairman of the association’s business survey committee.

“But is it good forever? Clearly not,” he said. “We have to get real growth well over 3% in order for everyone to be satisfied.”

Analysts said the results are considerably more upbeat than other forecasts.

“They’re looking for reasonably strong growth and low inflation,” said Robert Brusca, chief economist at Nikko Securities International. “Basically that’s a forecast that should be pleasing to everybody.”

Still, the managers remain troubled by the pace of recovery. The association’s semiannual forecast showed 28% of those polled rated the poor economy as their greatest worry. Looking 12 months down the road, 52% are concerned, against 44% who said they are satisfied or optimistic. Only 4% described themselves as worried or pessimistic.

To speed the economic rebound, the Federal Reserve may step in again to push interest rates lower, said Michael J. Boskin, chairman of the President’s Council of Economic Advisers, who addressed the managers on Monday. Boskin does not have a vote in Fed policy decisions.

He believes that “the weight of the evidence” supports an economic rebound without further rate cuts and concurred with predictions of an annualized growth rate of about 3% for the second half of the year.

On the employment front, Bretz said the “massive downsizing in manufacturing employment appears to be nearing an end. We expect an ever-increasing number of companies will actually hire rather than lay off over the course of the year.”

Indeed, 27% of those polled expect to add workers; 43% expect employment to hold at current levels, while 30% anticipate additional cutbacks, the survey showed.

Export growth is expected to remain strong despite unanimous agreement that the U.S. dollar will continue to strengthen against major foreign currencies, making U.S. products more expensive abroad.

Brusca said the group’s assessment about exports might be a bit rosy, considering that many foreign economies are either teetering or in actual decline, limiting consumers’ ability to make purchases.

Imports are also expected to increase, the survey showed, though at a lesser rate.

The purchasing managers, who are responsible for buying the raw materials that feed the nation’s factories, said their companies were producing at an average of 80.2% of their normal operating capacity. That’s up from a year ago but lower than the figure reported last December.

The association is best known for its monthly surveys on the manufacturing economy.