Business economists report solid but slowing growth in third quarter

People hold shopping bags along Broadway in New York City on Oct. 15.
(Spencer Platt / Getty Images)

Business economists reported solid but slowing growth at their companies over the summer as gauges of sales, hiring and profit margins fell slightly from the second quarter, according to survey results released Monday.

Despite concerns about economic conditions in Europe, respondents in the quarterly survey by the National Assn. for Business Economics said they were more optimistic about overall U.S. growth than they were in July.

About 85% said they expected total economic output, or gross domestic product, to expand by more than 2% over the next year. That compared with 77% who had those expectations in the last quarterly survey.

“Business conditions continued to improve during the third quarter, albeit at a marginally subdued pace from that of the second quarter, and the majority of the NABE Business Conditions Survey panelists report strong expectations for continued economic growth,” said John Silvia, chief economist for Wells Fargo Securities who serves as the organization’s president.


The findings are in line with analysts’ forecasts for solid economic growth in the third quarter, but a drop-off from the strong 4.6% annual rate in the previous quarter. Part of that robust second-quarter expansion was the economy catching up from a weather-induced contraction over the winter.

Sales growth at businesses slowed in the third quarter, with 49% reporting rising sales, compared with 57% in the previous quarter, the survey said.

The group’s overall sales index — measuring the percentage of respondents reporting rising sales minus the percentage reporting falling sales — decreased slightly to 42 from the previous quarter’s 45. The post-Great Recession high was 54 in 2011 and the low was 20 in the second quarter of last year.

Sales expectations for the next three months also were down, the survey said.


The percentage of economists reporting increased employment at their firms dropped to 32% in the third quarter, from 36% in the previous quarter, and expectations for hiring over the next three months also was down.

With several indicators running lower, the index for profit margins was off as well.

Although 30% of respondents said their companies’ profit margins had increased in the third quarter, compared with 27% in the previous quarter, the percentage of economists reporting falling profit margins rose to 14% from 8%. That caused the profit margin index to drop slightly.

The economists also weighed in on their expectations for when the Federal Reserve will start raising its benchmark short-term interest rate, which has been near zero since late 2008.


About 77% said they anticipated interest rates to begin rising in the second half of next year or later. Their views are in line with those of Fed analysts.

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