Capital spending by US firms was showing tentative signs of improvement and the pace of layoffs slowing a bit, an industry survey showed on Monday, further evidence the 16-month old recession was abating. The National Association for Business Economics' quarterly industry poll found that while companies remained pessimistic about growth prospects, there was a general sense the economy was not falling off the cliff.
"Key indicators - industry demand, employment, capital spending and profitability - are still declining, but the breadth of decline is narrowing," said Sara Johnson, spokeswoman for the survey. "Declines still outnumber gains, but fewer firms are reporting declines and more are reporting gains. This suggests that the economy is at an inflection point but has not yet reached a turning point."
Recent economic data and some earnings from some major US banks have shown some faint signs of improvement, but analysts reckon recovery is still months away. The NABE survey was conducted between March 23 and April 1, covering 109 members. Its measures for industry demand and capital spending hit record lows in the January poll.
In the latest survey, 21 percent of firms expected capital spending to rise over the next 12 months, including 6 percent that planned increases of over 10 percent. In January no respondents intended to raise capital spending by 10 percent or more and only 16 percent saw an increase. About 37 percent expected a decrease compared with 44 percent in the January poll.
The housing-led recession, which started in December 2007, is on track next month to become the longest since the Great Depression. The downturn has been marked by a slump in demand and rising unemployment. Since the start of the recession 5.1 million jobs have been lost and the unemployment rate is at 25-year high of 8.5 percent.
Firms that participated in the latest NABE survey expected job losses to continue over the next six months, but with the rate of bloodletting easing a bit. About 33 percent of the respondents planned layoffs and 16 percent intended to hire more workers. In January, 39 percent expected job cuts, while 17 percent saw hirings.
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