NEW YORK – Rising costs for materials and labor appear to be pressuring businesses, according to a quarterly survey from the National Association of Business Economics.
During the first quarter of the year, 31 percent of businesses surveyed reported higher material costs, more than double the 15 percent that saw costs rise in the previous survey. Additionally, 35 percent reported rising wages and salaries at their businesses in the past three months, up from 23 percent in January.
Yet those who said they raised the prices they charge in the past three months remained unchanged at 20 percent, according to the latest NABE survey of 72 members, which was conducted between March 18 and April 1.
It appears that businesses were not able to pass on costs increases, resulting in increased pressure on margins, the survey findings said.
The quarterly survey by NABE is intended to gauge business conditions at members’ firms or industries. The April survey reflects first-quarter results, as well as the near-term outlook.
Despite the cost pressures, businesses seem more upbeat about the direction of the broader economy. The survey found that 80 percent said they expect the GDP to rise at least 2 percent over the next year. Nearly three-quarters also said they expect labor market conditions to improve, with unemployment easing to between 5 percent and 6 percent in the next one to three years. And over the next six months, 43 percent of respondents expect their firms to expand employment.
Still, a majority expect wage growth to remain subdued, with growth of up to 3 percent over the next three years.