NEW YORK — Economists say the U.S. recovery continued during 2010's second quarter with more businesses hiring workers and fewer cutting jobs, but the pace of growth has slowed, a new survey shows.
The National Association for Business Economics said its latest survey, released Monday, found 31 percent of businesses added workers between April and June, the highest level in three years. And 39 percent of those surveyed say they expect to hire more workers over the next six months — the most since January 2008. Manufacturers reported the strongest increase in demand and profitability. Finance, insurance and real estate sectors saw the slowest growth. The survey was taken between June 11 and 29.
The number of respondents who think real gross domestic product, or GDP, will expand by more than 3 percent this year slid to 20 percent from the 24 percent who expected that rate of growth in April. But 67 percent of respondents still believe the economy will expand by more than 2 percent in 2010.
"NABE's July 2010 Industry Survey confirms that the U.S. recovery continued through the second quarter, although at a slower pace than earlier in the year," William Strauss of the Federal Reserve Bank of Chicago said. "Industry demand increased for a fourth consecutive quarter, although at a slower pace. Price and cost pressures were contained, allowing profits to edge higher. Credit and debt issues in Europe will likely negatively impact just over a third of the surveyed firms over the next three months."
The number of companies reporting layoffs and job cuts through attrition is down by half from a year ago and about steady with the first quarter of this year, the NABE found. Meanwhile, the number of businesses hiring jumped to 31 percent from 6 percent at the same time last year, and is up from 22 percent of those surveyed at the end of the first quarter. Goods-producing companies are doing most of the hiring, with only the services sector continuing to anticipate layoffs, the survey said.
Of the 84 NABE members from private sector and industry trade associations that responded to the latest survey, 52 percent said demand increased in the second quarter. Thirty-eight percent said it remained steady. Companies that raised prices outnumbered companies that cut them by three to one, which helped profit margins edge higher overall. However, that growth "slowed to a crawl," as materials costs continued to rise.
Looking ahead, most of the economists say the eurozone's debt crisis will have little or no effect on their business. However, more than a third of those surveyed think Europe's credit woes, austerity measures and the stronger dollar vs. the euro will moderately hurt growth.
Spending on building is expected to decline, but nearly half of companies say they plan to spend more money on computers and communications equipment.