New NABE Survey Shows Steady Improvement in Business Conditions in the Final Months of 2012, and Heightened Expectations for 2013

New NABE Survey Shows Steady Improvement in Business Conditions in the Final Months of 2012, and Heightened Expectations for 2013

The January 2013 NABE Industry Survey report presents the responses of 65 NABE members to a survey conducted between December 20, 2012-January 8, 2013, on business conditions in their firm or industry and reflects fourth-quarter 2012 results and the near-term outlook.

COMMENTS: “Results from NABE's January 2013 Industry Survey indicate that business activity advanced at a steady pace in the fourth quarter of 2012. Survey panelists also said that they are planning for stronger economic growth in the coming year than they were when the survey was last conducted three months ago,” said Timothy Gill, Chair of the NABE Industry Survey Committee and Director of Economics at the National Electrical Manufacturers Association. “The economy continues to soldier on. Sales growth was stable, even amid widespread uncertainty surrounding the potential impact of the fiscal cliff, but gains in profit margins slowed. More than one quarter of survey respondents said that their firm postponed at least some hiring and capital spending in the three months leading up to the then-impending fiscal cliff. The broader labor market nevertheless gained momentum in the fourth quarter, but increases in capital spending slowed. While the panel was nearly unanimous in its view that the economy will expand over the next four quarters, it was split as to the degree of growth expected. Half the panel reported that their firms’ internal planning assumes real GDP growth of between 2 and 4 percent, while the other half sees growth coming in below 2 percent. Hiring plans are reportedly picking up, though capital expansion plans are slowing. Still, more firms expect to add jobs and boost capital spending than to cut them in 2013.”


  • Sales growth was stable during the fourth quarter of 2012. The net rising index (NRI)—the percentage of panelists who reported rising unit demand minus the percentage who reported falling demand—held steady at 22. Thirty-seven percent of respondents reported rising sales at their firms, down from from the 39% who reported this the third quarter. Meanwhile, 15% reported falling sales, down slightly from the 16th in the third quarter.
  • NABE panelists are somewhat more optimistic about the economic growth outlook for the year ahead at the beginning of 2013 than they were three months ago. A full 50% now expect real GDP to grow between 2% and 4% in the current year. That is up from 36% that held this view in the previous survey. The share of panelists forecasting a sluggish or negative performance for real GDP in 2013 dropped to 50% from 65% in October.
  • Uncertainties surrounding the fiscal cliff led to postponed hiring and capital spending in the last three
    months of 2012.
    A sizable minority (27%) of NABE panelists reported that their firms postponed some or all hiring in the fourth quarter, though a large majority (70%) indicated that hiring was not affected. Similarly, 28% reported that the then-impending fiscal cliff led to partial or complete postponement capital spending planned for the fourth quarter, while 72% claimed there was no impact.
  • More respondents reported stepped-up capital spending at their firms in the fourth quarter than reported reduced spending, but the margin between more vs. less capital spending narrowed compared to that reported in the October survey and surveys conducted throughout much of last year. Moreover, expectations for capital spending growth over the next 12 months weakened from a quarter ago. Only 40% of panelists now expect their firm to grow
    capital spending in 2013 versus 52% who held this view in October. Thirteen percent of panelists see their firms shrinking capital spending in the coming year. Expectations for capital spending on computers and communications (which saw its NRI fall to 35 from 41 in October) and on structures (which saw its NRI fall to 7 from 18) remained positive but weaker than they were than three months earlier.
  • Meanwhile, the employment picture improved. The percentage of panelists reporting that employment at their firms grew in the fourth quarter rebounded to 25%, nearly the same proportion as in the first half of 2012. Even though a slightly larger share than in October also reported falling employment, the employment NRI climbed to 12 from just 7 in October. The NRI for the employment outlook also improved—doubling to 22 from 11 in October as a larger share of firms (34%) now expect to expand their payrolls in the next six months, while a smaller (13%) expect
    to shrink them.
  • Profit margins deteriorated in the fourth quarter as the percentage of panelists reporting rising margins slipped to 25% from 27% in October while the percentage reporting falling margins rose to 18% from 15% in October. As a result, the NRI fell to 7 from 13.
  • The NRI for prices charged by firms over the past three months edged up to 16 from 11 in the previous survey, as 20% of the NABE panel reported rising prices at their firms while only 5% reported them falling. In October, an identical 20% reported rising prices against vs. 8% reporting them falling.
  • Wage and salary gains picked up in the fourth quarter. More than one quarter of the panel reported a rise in wages at their firm, up 10 percentage points from October. Nearly a quarter of the panel said skilled labor was in short supply over the last three months of 2012. By contrast, materials costs showed signs of disinflation in the October-to-December period. The NRI slid to 12 from 21 in the October survey. A smaller share of panelists reported
    rising costs at their firm over the last three months (22%) than did so in October (31%), while the share reporting falling prices held steady at 10%. Reports of materials shortages were again minimal.
  • Panelists' expectations for both prices charged and materials costs over the next three months suggest modest inflationary pressure in the first quarter of 2013. Two-fifths of panelists expect their firms to raise prices charged, the highest share seen over the past year. Still, most of those expecting an increase think such a rise in prices charged will be less than 5%. Slightly more than one third expects primary non-labor input costs paid by their firms
    to rise during the next three months, down from the 43% who held this view in the previous survey, but still a sizable share of the panel.


All survey panelists are NABE members who work for private-sector firms and industry trade associations.Panelists were classified into industry NAICS codes and then grouped into four sectors as follows: goods-producing; transportation, utilities, information, communications (TUIC); finance, insurance, real estate(FIRE); and services. Industry groupings, beginning with the January 2007 survey, are as follows:

Goods-producing:NAICS 11 Agriculture, forestry, fishery, hunting; 21 Mining; 23 Construction; 31-33 Manufacturing

.Transportation, Utilities, Information, Communications (TUIC):NAICS 22 Utilities; 48-49Transportation & warehousing; 51 Information–publishing, software, broadcasting, Internet publishing andproviders, telecommunications, etc.Finance, Insurance, Real Estate

(FIRE):NAICS 52 Finance and insurance—credit intermediation,including commercial and savings banks, credit unions, mortgage bankers; securities and other financialinvestments, trust, pension funds; health insurance and other insurance; 53 Real estate, rental, leasing.

Services:NAICS 42 Wholesale trade; 44-45 Retail trade; 54 Professional, scientific, technical services; 62 Health care services; 56 Administrative, support, waste management & remediation services; 71 Art,entertainment, recreation; 72 Accommodations & food service; 81 Other services.

The charts and many of the tables display a Net Rising Index (NRI), a diffusion index calculated as thepercent of responses reporting rising results minus the percent reporting falling results. Thus, the index hasa possible range of +100 (all positive responses) to -100 (all negative), with 0 indicating an equal mix. Allresults shown are rounded to the nearest whole percentage; thus, details may not add to 100 and the NRImay not match the difference in rounded components. Shaded areas on charts indicate recessions.A total of 67 panelists responded to the survey; the number of panelists responding to each question isincluded in the tables. Roughly 5% of the panelists were from single-person firms; 26% in firms with 2-10 employees; 18% in firms with 11-100 employees; 11% in firms with 101-1,000 employees; and 40%in firms with more than 1,000 employees. Fifty-two percent of the firms had no sales from foreign-basedoperations; 24% reported one quarter or less of total sales from abroad; 15% reported between onequarter and one half of sales from abroad; and 9% indicated more than half of all sales were from abroad.

A total of 65 panelists responded to the survey; the number of panelists responding to each question is included in the tables. Two percent of the panelists were from single-person firms; 25% from firms with 2-10 employees; 20% from firms with 11-100 employees; 16% from firms with 101-1,000 employees; and 38% from firms with more than 1,000 employees. Fifty-six percent of the firms had no sales from foreign-based operations; 25% reported one quarter or less of total sales from abroad; 13% reported between one quarter and one half of sales from abroad; and 6% indicated more than half of all sales were from abroad.

The NABE Industry Survey has been conducted quarterly since 1982. This survey is one of three administered by NABE; the others are the quarterly NABE Outlook and the semiannual NABE Economic Policy Survey. Founded in 1959, the National Association for Business Economics is the professional association for people who use economics in their work. Timothy Gill, National Electrical Manufacturers Association; Martha Moore, American Chemistry Council; Sara Rutledge, Invesco Real Estate; Stacey Schreft, The Mutual Fund Research Center; and Yingying Xu, Manufacturers Alliance for Productivity and Innovation, conducted the analysis for this report.

January 2013 Industry Survey

Industry Survey Highlights

Industry Survey  Details

Print Version (pdf)

Historical Data (XLS)

Tabulations (XLS)

Questions (pdf}