The country’s business activity in the first quarter of 2013 grew at its strongest pace in a year, according to the assessment of 58 business economists (11 of whom work for companies in an industry group that includes construction) polled by the National Association of Business Economics, which released its April report on Monday.
The survey also found increases in businesses’ profit margins and capital spending at the economists’ firms. And expectations for hiring and further investment strengthened in April, despite the economists’ consensus that the nation’s GDP would grow by only 2% in 2013.
Fifty-five percent of the economists polled said that their companies’ sales rose in the first quarter, up from 37% a year ago. But that didn’t necessarily inspire businesses to resume hiring: employment growth was virtually unchanged at the economists’ firms in the first quarter, even as the nation’s unemployment rate continued to fall incrementally during the first three months of the year.
However, the employment outlook among the survey’s respondents is the highest it’s been in two years. Forty percent of survey respondents expect employment at their firm to increase over the next six months (up from 34% in January) compared to only 9% who expect it to decline.
That should be good news for the housing industry, whose growth prospects hinge so heavily on their buyers’ financial health. However, the survey also found that the costs of building materials and labor increased in the first quarter. One-fifth of the panelists reported a rise in materials costs and none reported a decline. Materials shortages were minimal, and less than one-quarter of those polled said their companies had experienced even short supplies of skilled labor.
Among the economists in the group that includes construction, 73% said they were paying closest attention to global economic conditions and their impact on their businesses and industries over the next 12 months. Another 9% are most concerned about the impact of further government spending cuts over the next year.
“Optimism is restrained,” writes Timothy Gill, an NABE economist, who points out that only 5% of the association’s members expect the GDP to expand, long term, at a rate beyond 3%.
John Caulfield is senior editor forBuilder magazine.