The US recession's grip on the economy appears to be easing but likely has not yet ended, according to a survey of economists released today.
The National Association for Business Economics' (NABE) quarterly industry survey found that demand is stabilizing, but a small majority of the 102 respondents said their firms had not yet seen the bottom. The survey "provides new evidence that the U.S. recession is abating, but few signs of an immediate recovery," said Sara Johnson, managing director of global macroeconomics for IHS Global Insight, who helped analyze the report for the NABE.
"Industry demand was still declining in the second quarter of 2009, but the breadth of decline had narrowed considerably since late 2008, raising prospects for stabilization in the second half" of the year, she said. The net demand index dropped to -5 from the first quarter's -14. In the fourth quarter it registered -28. Of the four major sectors, financial services showed the strongest demand, with an index reading of +15. The transportation, utilities, information and communications sector had the lowest reading at -90.
The U.S. recession, which dates to December 2007, is the longest since the Great Depression and the deepest in decades. Most economists look for growth to return in the second half of the year, but they caution that the recovery is likely to be sluggish. The survey found that profitability remained weak in the second quarter. Companies reporting declining profits outnumbered companies posting higher profits for the sixth straight quarter. However, the rate at which profits are shrinking is slowing.
There was wide dissension about whether or not the economy has hit bottom. Fifty-five percent believe the low point has not yet been hit, with 14% projecting their companies will see their lowest sales in 2010 or beyond. Forty-five percent, however, said the worst was already over. Thirty-six percent of respondents said their companies cut jobs last quarter, while only 6% of the firms added jobs - an all-time low for the 30-year-old survey. Respondents expect job losses to slow and look for employment to finally turn higher later this year. (Reuters)