According to a report published Monday, U.S. businesses hope that their sales would skyrocket in the following three months and help them boost hiring and pay their employees more after a disappointing first quarter.
Only 49 percent of surveyed companies reported that their sales rebounded in the first quarter of the year. In January, according to a previous report, about 54 percent of companies involved in the survey said that they had experienced higher sales.
On the other hand, the majority of companies that were recently surveyed were more optimistic about the April-June quarter. Up to three quarters of firms expected a big boost in sales over the next quarter, while only 68 percent were that optimistic in January and 54 percent in last October.
Such findings suggest that the sluggish economic growth recorded from January through March was temporary. Analysts blame harsh winter temperatures that prevented customers from leaving their homes, labor strikes on the West Coast which froze shipping, and an ever strengthening dollar for the 1 percent growth pace of the U.S. economy since the beginning of the year.
On the other hand, most economists forecast an accelerated growth in the second quarter.
“Growth in the first quarter appears to be an outlier within the broader economic outlook,”
said the chief financial adviser for Wells Fargo who was also involved in the recent survey on U.S. business sentiment.
The survey involved 77 companies which expressed their expectations for the next quarter growth. Although their number isn’t impressive, the companies are highly representative for the business sector they operate in. The surveyed companies do business in manufacturing, finance, home building, restaurants and hotels, while half of them have more than 1,000 employees. About a quarter have fewer than ten employees.
Moreover, these companies were also confident that they would be able to hike wages in the coming quarter. About 45 percent said that, while in January only 31 percent believed they could raise pay in the following months.
About 46 percent reported that they didn’t cut back on salaries in the first quarter due to sluggish sales. But, the finding is at odds with the federal reports on hourly pay which show that hourly wages have only risen 2.1 percent in the last year. This pace is similar to the one recorded in 2009, when the recession was officially over.
More than a third of surveyed companies reported that they have hired new people in the first quarter despite slow economic growth. A similar percentage reported doing the same in the last four quarters. And more than 40 percent promised they would hire more people over the course of the April-June quarter. In January, only 36 percent said that.
The survey also found that companies were less likely to invest in new technology in the first quarter. Many of them declined to improve their computers and communications equipment in the last three months. Only 38 percent invested in new equipment since the beginning of the year, although in January 51 percent promised they would improve their gear.
Moreover, many companies reported that the dollar hurt their businesses, since a stronger dollar made exports to Europe more expensive and the oversea profits less spectacular.
Image Source: Business Insider