NABE - Industry Survey October 2012 Details

NABE Industry Survey October 2012 Detailed Results

Sales

The survey results show similar flatness in sales relative to the prior survey, although a slightly higher share of panelists are reporting falling sales. The share of panelists in the October survey reporting rising sales (39%) is unchanged from the July survey, although a slightly higher share of panelists reported falling sales relative to the last survey (16% in the October survey relative to 11% in the July survey) and a lower share of panelists reported unchanged sales (45% in the October survey vs. 51% in the July survey). The Net Rising Index (NRI)—the difference between the percentage of respondents reporting rising vs. falling sales—has fallen from 28 in the prior survey down to 22 in this survey because a slightly higher share of panelists report falling sales and a slightly lower share of panelists report unchanged sales, although the same share of panelists report rising sales.

Almost one quarter of the panelists in the transportation, utilities, information, and communication (TUIC) sector reported falling sales, while 19% of the panelists in the goods-producing sector and 17% of the panelists in the services sector reported falling sales. Only 6% of the panelists in the finance, insurance, and real estate (FIRE) sector reported falling sales; indeed, 63% of the panelists in that sector reported rising sales, which is why the FIRE sector has the highest NRI of the four sectors at 56. About 38%-39% of panelists in the goods-producing sector and the services sector reported rising sales over the past three months. Although a similar share in the goods-producing sector and the services sector reported rising sales in the July survey as in the October survey, a higher share of FIRE panelists reported rising sales (50% in the July survey vs. 63% in the October survey) and a lower share in the TUIC sector reported rising sales (27% in the July survey vs. 18% in the October survey). This suggests that the FIRE sector may be showing improvement. The NRI for the TUIC sector at -6 is due to having the highest share of panelists (59%) reporting unchanged sales and the lowest share of panelists (18%) reporting rising sales. In all of the sectors except for the FIRE sector, a higher share of panelists in the October survey reported falling sales than in the July survey. Indeed, 7% of the panelists in the goods-producing sector reported falling sales in the July survey while 19% reported falling sales in the October survey; 18% of the panelists in the TUIC sector reported falling sales in the July survey while 24% reported falling sales in the October survey; 13% of the panelists in the services sector reported falling sales in the July survey while 17% reported falling sales in the October survey. The share of panelists in the FIRE sector reporting falling sales was constant (6%) in the July and the October surveys.

Percent of total respondents (67) reporting that over the past three months, their company’s products or services sales, adjusted for inflation, have been:
Survey Month	Rising	Unchanged	Falling	Net Rising
October '12	39	45	16	22
July '12	39	51	11	28
April '12	60	30	10	51
Jan 2012	41	40	19	22
October '11	49	38	13	36

By Sector - October 2012
Sector	Rising	Unchanged	Falling	NRI	Number Responding
Goods-Producing	38	44	19	19	16
TUIC	18	59	24	-6	17
FIRE	63	31	6	56	16
Services	39	44	17	22	18

Figure 1 - Sales Net Rising Index

Profits

The profit margin results in this survey are similar to the findings in the previous survey in July. The greatest share of the panelists—58%—reported unchanged profit margins over the past three months, while 27% reported rising profit margins and 15% reported falling profit margins. This suggests continued stability in the profit margins of the panelists’ companies. Due to a slightly higher share of panelists reporting falling profit margins and a slightly lower share of panelists reporting rising profit margins, the NRI has fallen from 16 in the prior survey to 13 in this survey.

In the four sectors, the highest share of panelists—between 44% and 77%—reported unchanged profit margins over the past three months. About 38%-39% of respondents in the services and goods-producing sectors reported rising profit margins, which contributed to their NRIs of 22 and 25, respectively. About 20% of the panelists in the FIRE sector reported rising profit margins and 67% of the panelists reported unchanged profit margins, which led to an NRI of 7. In the TUIC sector, 8% of the panelists reported rising profit margins and 77% reported unchanged profit margins, which led to an NRI of -8. Across the sectors, between 13% and 17% of the panelists reported falling profit margins. The results in this survey are similar to the results in the July survey. The share of panelists reporting rising profit margins has risen in the services sector from 27% in the July survey to 39% in the October survey. The share of panelists reporting rising profit margins has fallen since the last survey in the goods-producing sector (43% in July vs. 38% in October), the TUIC sector (17% in July vs. 8% in October), and the FIRE sector (27% in July vs. 20% in October). The share of panelists reporting falling profit margins in the TUIC sector has increased since the last survey from 8% in the July survey to 15% in the October survey, while the share in the other sectors has remained similar.

Percent of total respondents (62) reporting that over the past
three months, their company’s profit margins have been:
Survey Month	Rising	Unchanged	Falling	Net Rising
October '12	27	58	15	13
July '12	29	59	13	16
April 2012	40	42	18	22
January 2012	30	55	15	15
October '11	27	58	16	11

By Sector, October 2012:
Sector	Rising	Unchanged	Falling	Net Rising	Number Responding
Goods-Producing	38	50	13	25	16
TUIC	8	77	15	-8	13
FIRE	20	67	13	7	15
Services	39	44	17	22	18

Figure 2 - Profit Margin Net Rising Index

Prices Charged

In the October survey, about 20% of the panelists reported that the prices charged by their firms over the past three months have risen, which is an increase over the 9% of panelists reporting rising prices in the July survey. This led to an increase in the NRI from -3 in the July survey to 11 in the current survey. This suggests the potential for slightly higher inflationary pressures in the economy relative to the prior survey. Nevertheless, the share of panelists reporting rising prices is similar to the share reporting rising prices in the April 2012 survey, the January 2012 survey, and the October 2011 survey. In the current survey, a slightly lower share of panelists reported unchanged prices (72% in the October survey vs. 79% in the July survey) and a slightly lower share reported falling prices (8% in the October survey vs. 12% in the July survey), although the results are largely consistent with surveys conducted over the past year.

Between 67% and 79% of the panelists within each of the four sectors reported unchanged prices, while between 14% and 25% reported rising prices. Relative to the sectoral results of the prior survey in July, a higher share of panelists in each of the four sectors reported rising prices charged by their firms in the October survey: the share of panelists in the goods-producing sector reporting rising prices has increased from 14% in the July survey to 20% in the October survey; the share of panelists in the TUIC sector reporting rising prices has risen from 17% to 25%; the share of panelists in the services sector has risen from 9% to 19%, and the share of panelists in the FIRE sector has risen from 0% to 14%. The share of panelists reporting falling prices has decreased in the October survey relative to the July survey in the goods-producing sector (29% in July vs. 13% in October) and the FIRE sector (18% in July vs. 7% in October). The share of panelists reporting falling prices has increased in the services sector from 4% in the July survey to 13% in the October survey. The share of panelists in the TUIC sector reporting falling prices (0%) remains the same. The TUIC’s NRI of 25 is much higher than the NRIs of the other sectors (in the 6-7 range) because none of the panelists reported falling prices and one quarter of them reported rising prices.

Percent of total respondents (66) reporting that over the past three months prices charged by their firms have been:
Survey Month	Rising	Unchanged	Falling	Net Rising
October '12	20	72	8	11
July '12	9	79	12	-3
April 2012	21	67	12	10
January 2012	18	78	3	15
October '11	25	66	9	16

By Sector, October 2012
Sector	Rising	Unchanged	Falling	Net Rising	Number Responding
Goods-Producing	20	67	13	7	15
TUIC	25	75	0	25	16
FIRE	14	79	7	7	14
Services	19	69	13	6	16

Prices Charged Net Rising Index

Inflationary expectations of NABE panelists regarding the prices that their firms will charge over the next three months remain muted in that two-thirds of the panelists expect that the prices charged by their company will not change over the next three months, although there is some possibility of greater inflationary pressures in that 23% of the panelists suggest that prices will increase. In the prior survey, only 12% of the panelists suggested that prices would rise and 74% suggested that prices would remain unchanged. The increase in the share of panelists suggesting rising prices and the decrease in the share of panelists suggesting unchanged prices has led to an increase in the NRI from -3 in the last survey to 11 in the current survey. The 23% of panelists in this survey suggesting a price increase is consistent with the 20%-32% of panelists in the October 2011, January 2012, and April 2012 surveys who believed that the prices charged by their firms would rise. A slightly lower share of panelists in the October 2012 survey relative to the July 2012 survey (11% vs. 15%) suggested that prices would fall.

Percent of total respondents (53) reporting they expect prices charged over the next three months will:
	Oct '12	July '12	April '12	Jan '12	Oct '11
Fall more than 5%	3	2	0	0	5
Fall 5% or less	8	13	6	3	9
Will not change	66	74	66	65	67
Rise 5% or less	20	10	25	32	17
Rise more than 5%	3	2	4	0	3
NRI (all rising less falling	11	-3	23	28	6

Costs

About 60% of the panelists report that the materials costs of their firms over the past three months have been unchanged, which is slightly lower than the share of panelists in the July survey reporting unchanged prices (65%) and higher than the 53%-59% of panelists reporting unchanged prices in the October 2011, January 2012, and April 2012 surveys. Almost one-third of the panelists reported rising materials costs, which is higher than the 22% of panelists reporting rising materials costs in the July survey, and similar to the share of panelists in the October 2011 and January 2012 surveys reporting rising materials costs. Similarly, a slightly smaller share of panelists suggest falling materials costs in this survey relative to the July survey (10% in this survey vs. 14% in the July survey). This suggests that although inflationary pressures continue to be flat for almost two-thirds of the panelists, about one-third of the panelists are experiencing rising inflationary pressures in materials costs. Due to the higher share of panelists reporting rising materials costs relative to the July survey and the lower share of panelists reporting falling materials costs, the NRI has risen from 8 in the July survey to 21 in the current survey.

Although between 63% and 70% of panelists in the goods-producing, FIRE, and services sectors are reporting unchanged materials prices, only 36% of the panelists in the TUIC sector report unchanged materials prices. Although 55% of panelists in the TUIC sector report rising materials prices, between 19% and 30% of panelists in the other three sectors report rising materials prices, which explains why the TUIC sector’s NRI of 45 is much higher than the NRIs for the other sectors. In the July survey, between 21% and 31% of panelists in the services, TUIC, and FIRE sectors reported rising materials prices, while only 8% of panelists in the goods-producing sector reported rising materials prices. About 19% of the panelists in the goods-producing sector report falling materials prices in the October survey, while 38% of them reported falling materials prices in the July survey. Relative to the July survey, a higher share of panelists in the goods-producing sector reported rising materials prices in this survey (8% vs. 19%), as well as in the TUIC sector (27% vs. 55%) and the services sector (21% vs. 27%).

Percent of total respondents (52) reporting that the materials costs
of their firms over the past three months have been generally:
Survey Month	Rising	Unchanged	Falling	Net Rising
October 2012	31	60	10	21
July 2012	22	65	14	8
April 2012	37	56	7	29
January 2012	31	59	10	20
October 2011	33	53	13	20

By Sector, October 2012
Sector	Rising	Unchanged	Falling	Net Rising	Number Responding
Goods-Producing	19	63	19	0	16
TUIC	55	36	9	45	11
FIRE	30	70	0	30	10
Services	27	68	7	20	15

Material Costs Net Rising Index

The inflationary expectations of almost half of the panelists regarding primary non-labor input prices over the next three months continue to exhibit flatness, although there is a greater expectation that primary non-labor input prices will increase. About 45% of the panelists in the current survey expect that primary non-labor input prices will not change over the next three months, while 58% of the panelists held that view in the July survey. A higher share of panelists expect primary, non-labor input prices to increase over the next three months (43%) relative to the share of panelists who held this view in the prior survey (26%). As a result, the NRI has risen from 10 in the July survey to 31 in the current survey.

Percent of total respondents (58) reporting expected change in primary non-labor input prices over the next 3 months:
Sector	Oct '12	July '12	April '12	Jan '12	Oct '11
Fall more than 5%	0	0	0	0	0
Fall less than 5%	12	16	7	4	16
Will not change	45	58	42	55	57
Rise less than 5%	34	24	47	36	25
Rise more than 5%	9	2	4	4	2
Net Rising (all rising less falling)	31	10	44	36	11

Over four-fifths of the panelists report that their wages and salaries have been unchanged and only 17% report rising wages and salaries, while none of the panelists report falling wages and salaries. The share of panelists reporting rising wages and salaries (17%) is lower than the share of panelists holding this view in the prior surveys in July 2012 (25%), April 2012 (44%), January 2012 (26%), October 2011 (19%), and July 2011 (28%), suggesting that fewer inflationary pressures are driven by rising wages and salaries. A greater share of panelists reported unchanged wages and salaries over the past three months in the October survey (83%), relative to the surveys in July 2012 (70%), April 2012 (48%), January 2012 (71%), October 2011 (76%), and July 2011 (72%). This suggests greater stability in wages and salaries.

Percent of total respondents (67) reporting that wages and salaries are:
Survey Month	Rising	Unchanged	Falling	Net Rising
October 2012	17	83	0	17
July 2012	25	70	5	20
April 2012	44	48	8	36
January 2012	26	71	3	23
October 2011	19	76	4	15

Shortages

The share of panelists reporting no input shortages in the current survey (61%) is lower than in the prior surveys in July 2012 (75%), April 2012 (70%), January 2012 (72%), and October 2011 (70%). As in the prior surveys, shortages of skilled labor continue to be the most important area of shortages, relative to unskilled labor, intermediate inputs, raw material inputs, and capital goods.

Percent of total (67) reporting shortages in survey month:
Sector	Oct 2012	July 2012	April 2012	Jan 2012	Oct 2011
Skilled labor	19	20	25	21	17
Unskilled labor	3	0	0	0	0
Intermediate inputs	6	3	2	7	3
Raw material inputs	0	3	4	0	10
Capital goods	3	0	0	0	0
No shortages	61	75	70	72	70
Don't Know	10	3	4	3	5

Note: Columns sum to more than 100% if respondents listed multiple shortages.

Employment

In the October survey, 18% of panelists reported rising employment, which is slightly lower than the share of panelists (22%) reporting rising employment in the July 2012 survey, and lower than the 28%-30% reporting rising employment in the prior surveys in April 2012, January 2012, and October 2011. This has contributed to the decline in the NRI from 19 in the January 2012 survey to 7 in the current survey. As in the prior survey, over two-thirds of the panelists (72% in the October survey and 69% in the July survey) reported unchanged employment, which suggests continued stability, since only 10% of the panelists reported falling employment at their firm, which is similar to the results from the July survey.

The majority of respondents in each of the sectors—between 63% and 89%—reported that unemployment over the past three months is unchanged. Between 18% and 31% of panelists in the goods-producing sector, the TUIC sector, and the FIRE sector reported rising employment, although only 6% of respondents in the services sector reported rising employment. The highest shares of panelists reporting falling employment in their sectors were in the TUIC sector (18%) and the goods-producing sector (13%). The share of panelists in the services sector reporting rising employment over the past three months fell from 29% in the July survey to 6% in the October survey, while the share reporting unchanged employment in that sector rose from 67% in the July survey to 89% in the October survey. The share of panelists reporting rising employment in the goods-producing sector increased from 14% in the July survey to 19% in the October survey, while the share of panelists in the FIRE sector reporting rising employment increased from 18% in the July survey to 31% in the October survey. The TUIC sector was the only sector which experienced a decline in the share of panelists reporting rising employment between the July survey (25%) and the October survey (18%). The FIRE sector had the highest NRI relative to the other sectors (25) because it had the highest share of panelists reporting rising employment (31%) and the lowest share of panelists reporting falling employment (6%).

Percent of total respondents (67) reporting that employment is:
Survey Month	Rising	Unchanged	Falling	Net Rising
October 2012	18	72	10	7
July 2012	22	69	9	13
April 2012	28	59	13	15
January 2012	29	62	10	19
October 2011	30	57	13	17
July 2011	42	49	8	34

By Sector, October 2012:
Sector	Rising	Unchanged	Falling	Net Rising	Number Responding
Goods-Producing	19	69	13	6	16
TUIC	18	65	18	0	17
FIRE	31	63	6	25	16
Services	6	89	6	0	18

Employment Net Rising Index

Employment Outlook

The panelists in the October survey continue their stable outlook concerning employment over the next six months. About 55% of the panelists suggest that their employment is likely to remain unchanged, which is a slightly lower share of panelists holding this view than in the July 2012 survey (62%), the January 2012 survey (64%), and the October 2011 survey (59%), although it is a higher share than in the April 2012 survey (48%). A higher share of panelists (28%) in the October survey suggest that their firm’s employment is likely to increase relative to the share of panelists who held this view in the July survey (23%), and is similar to the share of panelists which held this view in the January 2012 survey (27%) and the October 2011 survey (29%), although it is a lower share of panelists than in the April 2012 survey (39%). About 14% of the panelists suggest that the firm’s employment will decrease through attrition and 3% suggest that it will decrease through significant layoffs, which is consistent with the results from the previous survey in July.

Between 50% and 69% of the panelists in the goods-producing sector, the TUIC sector, and the services sector suggest that their firm’s employment is likely to remain unchanged over the next six months, while only 31% of panelists in the FIRE sector hold this view. Abut 56% of the panelists in the FIRE sector suggest that employment could increase over the next six months, whereas only 31% of the panelists in the goods-producing sector hold this view, 19% of the panelists in the services sector hold this view, and only 6% of the panelists in the TUIC sector hold this view. This suggests that although the panelists in the goods-producing sector, the TUIC sector, and the services sector forecast stability in employment over the next six months, the FIRE sector panelists forecast growth. Indeed, due to the substantive share of panelists in the FIRE sector expecting an increase in employment and a low share of panelists forecasting decreases, the NRI for the FIRE sector is 44, whereas the NRIs of the other sectors range from -19 to 13.

Between 13% and 19% of panelists in the goods-producing, TUIC, and FIRE sectors suggest that employment could decrease through attrition, while only 6% of panelists in the services sector hold this view. None of the panelists in the goods-producing sector and in the FIRE sector forecast decreases through significant layoffs, while only 6% of panelists in the TUIC sector and the services sector forecast decreases through significant layoffs. In the July survey, 29% of the panelists in the goods-producing sector forecast decreases through attrition and 14% forecast an increase in employment, while in the October survey, 19% of the panelists in this sector forecast decreases through attrition and 31% forecast an increase in employment, suggesting an improved outlook. Similarly, panelists in the FIRE sector in the October survey also forecast an improved outlook relative to the July survey: A higher share of panelists in the October survey forecast an increase in employment (56% in October vs. 31% in July) while a lower share forecast no change in employment (31% in the October survey vs. 63% in the July survey). In the TUIC sector, 25% of the panelists forecast an increase in employment in the July survey, while only 6% held this view in the October survey, suggesting a more negative outlook. On a positive note, however, a higher share of panelists in the TUIC sector suggest no change in employment (69% in the October survey vs. 42% in the July survey) and a lower share forecast decreases through attrition (19% in the October survey vs. 33% in the July survey).

Percent of total respondents (64) reporting that in next six month employment will:
	October 2012	July 2012	April 2012	Jan 2012	Oct 2011
Increase	28	23	39	27	29
No change	55	62	48	64	59
Decrease through attrition	14	14	11	5	9
Decrease through significant layoffs	3	2	2	3	3
NRI (increase less all decreases)	11	8	26	19	18

By Sector, October 2012:
	Goods-Producing	TUIC	FIRE	Services
Increase	31	6	56	19
No change	50	69	31	69
Decrease through attrition	19	19	13	6
Decrease through significant layoffs	0	6	0	6
NRI (increase less all decreases)	13	-19	44	6
Number responding	16	16	16	16

Expected Employment Net Rising Index

Capital Spending

Almost two-thirds of the panelists (61%) reported unchanged capital spending over the past three months, while 31% reported rising capital spending and only 8% reported falling capital spending. On a positive note, a higher share of panelists reported rising capital expenditures in this survey (31%) relative to the prior survey (20%), while a smaller share of panelists (8%) reported falling capital expenditures than in the prior survey (15%). As a result, the NRI has risen from 5 in the July 2012 survey to 23 in the October 2012 survey, which is similar to the NRIs in the April 2012 survey and the October 2011 survey. About two-thirds of the panelists in the goods-producing sector reported rising capital expenditures, which is a significantly higher share than the 38% which reported this in the July survey. The goods-producing sector also had a smaller share of panelists reporting unchanged capital spending than in the prior survey (54% in July vs. 33% in October). Between 57% and 76% of the panelists in the TUIC sector, the FIRE sector, and the services sector reported unchanged capital spending, which is similar to the results in the July survey. Between 12% and 29% of the panelists in the TUIC, FIRE, and services sectors reported rising capital spending. Indeed, the share of panelists in the FIRE sector reporting rising capital expenditures rose from 20% in the July survey to 29% in the October survey. On a positive note, the share of panelists in the July survey reporting falling capital expenditures ranged from 8% to 20%, but the share of panelists in the October survey reporting falling capital expenditures ranged from 0% to 14%.

Percent of total (61) reporting that capital spending is:
Survey Month	Rising	Unchanged	Falling	Net Rising
October 2012	31	61	8	23
July 2012	20	65	15	5
April 2012	29	65	6	23
January 2012	42	49	8	34
October 2011	33	60	7	25

By Sector, October 2012:
Sector	Rising	Unchanged	Falling	Net Rising	Number Responding
Goods-Producing	67	33	0	67	15
TUIC	20	73	7	13	15
FIRE	29	57	14	14	14
Services	12	76	12	0	17

Capital Spending Net Rising Index

In the current survey, 36% of panelists predict that capital spending at their firm will stay about the same over the next 12 months, 52% expect that capital spending will increase, and about 12% expect capital spending to decline over the next year. Relative to the prior survey in July, a lower share expects that capital spending will remain the same over the next twelve months (36% in October vs. 49% in July) and a higher share expects moderate increases in capital spending of 10% or less (29% in July vs. 39% in October). As a result of a higher share of panelists forecasting a moderate increase in capital spending and a lower share forecasting that capital spending will remain the same, the NRI has risen from 31 in the July survey to 41 in the current survey.

In each of the four sectors, at least 80% of the panelists suggest that capital spending will increase or stay the same over the next 12 months; this view was held by 94% of panelists in the goods-producing sector (higher than the 86% in the July survey), 82% of panelists in the TUIC sector (similar to the 80% in the July survey), 100% of panelists in the FIRE sector (higher than the 93% of panelists in the July survey), and 82% of panelists in the services sector (lower than the 95% in the July survey). The TUIC sector has the greatest share of panelists—19%—expecting capital spending to fall— closely followed by the services sector, in which 18% of the panelists hold this view. Relative to the July survey, a smaller share of panelists in the goods-producing sector, the TUIC sector, and the FIRE sector expect capital spending decreases of more than 10%, although a higher share of panelists in the services sector expect capital spending decreases of more than 10%.

Percent of Total Reporting (61) that their firm’s total capital spending over the next 12 months is likely to:
	Total	Goods Producing	TUIC	FIRE	Services
Increase more than 10%	13	27	13	8	6
Increase 10% or less	39	47	31	54	29
Stay about the same	36	20	38	38	47
Decrease 10% or less	7	7	13	0	6
Decrease more than 10%	5	0	6	0	12
NRI (all increases less decreases)	41	67	25	62	18
Number reporting	61	15	16	13	17

Only 10% of the panelists expect spending on computers and communications equipment to decline over the next 12 months, while 90% of panelists expect it to increase or to stay the same—39% expect it to stay the same and 51% expect that it will increase. These results are similar to the prior survey. Across the sectors, the share of panelists expecting spending on computers and communications equipment to increase ranged from 38% (the TUIC sector) to 60% (the FIRE sector). In the July survey, the share expecting spending to increase ranged from 30% (the TUIC sector) to 52% (the services sector). The share of panelists in the October survey expecting spending on computers and communications to increase by more than 10% ranged from 7% (the goods-producing sector) to 20% (the FIRE sector) while in the July survey, the share of panelists holding this view ranged from 0% (the goods-producing sector) to 14% (the services sector). Between 33% (the FIRE sector) and 54% (the TUIC sector) expect spending to remain the same. The services sector has the highest share of panelists suggesting a decrease in computers and communications equipment (18%), although in the July survey, only 5% held this view.

Percent of Total Reporting (59) That Spending On Computers and Communications Equipment
Over the Next 12 Months will:
	Total	Goods Producing	TUIC	FIRE	Services
Increase more than 10%	15	7	15	20	18
Increase 10% or less	36	50	23	40	29
Stay about the same	39	36	54	33	35
Decrease 10% or less	3	7	0	0	6
Decrease more than 10%	7	0	8	7	12
NRI (all increases less decreases)	41	50	31	53	29
Number reporting	59	14	13	15	17

About 64% of panelists across sectors believe that their firm’s spending on structures will stay about the same over the next 12 months, and 27% of panelists believe that it will increase, which is similar to the prior survey in which 56% of panelists believed that the firm’s spending on structures would stay the same, and 26% believed that it would increase. About 10% of panelists in the current survey believe that capital spending on structures may fall over the next 12 months, which is lower than the 19% of panelists who held this view in the prior survey. The NRI has risen from 7 in the last survey to 18 in the current survey largely due to the lower share of panelists forecasting that capital spending may fall. The share of panelists forecasting that spending on structures over the next 12 months will stay about the same ranged from 46% (the goods-producing sector) to 82% (the TUIC sector). In the prior survey in July, the share of panelists holding this view ranged from 29% (the goods-producing sector) to 86% (the services sector). The share of panelists forecasting that spending on structures over the next twelve months will increase ranged from 11% (the services sector) to 46% (the goods-producing sector). In the prior survey in July, the share of panelists holding this view ranged from 0% (the services sector) to 50% (the goods-producing sector).

Percent of Total Reporting (44) That Spending On Structures Over the Next 12 Months will:
	Total	Goods Producing	TUIC	FIRE	Services
Increase more than 10%	9	23	0	9	0
Increase 10% or less	18	23	18	18	11
Stay about the same	64	46	82	55	78
Decrease 10% or less	5	0	0	9	11
Decrease more than 10%	5	8	0	9	0
NRI (all increases less decreases)	18	38	18	9	0
Number reporting	44	13	11	11	9

International Sales

About 44% of the panelists in the October survey reported that some portion of their firm’s sales came from foreignbased operations, although only 11% of panelists indicated that their company received more than half of their sales from foreign-based operations. Proportionally, firms in the goods-producing sector had the largest foreign presence, with 75% of panelists from this sector reporting some sales, and 31% reporting that more than half of their company’s sales came from operations abroad. The remaining three sectors had a much smaller cross-border footprint. About 88% of our service sector panelists reported that their firm had no sales from foreign-based operations, followed by 67% of TUIC panelists’ firms and 44% of FIRE panelists. No panelists from firms in the services sector or the TUIC sector and only 13% of panelists in the FIRE sector reported having more than half of sales from foreign operations.

Percent of total respondents (64) reporting their company’s share of sales from foreign-based operations:
	Total	Goods Producing	TUIC	FIRE	Services
0%	56	25	67	44	88
1-25%	27	31	27	38	12
26-50%	6	13	7	6	0
51% or higher	11	31	0	13	0
Number Responding	64	16	15	16	17

About 33% of the panelists with foreign operations reported that over the past three months, their company’s sales from foreign-based operations are increasing, 45% report unchanged sales, and 21% report falling sales. In July a slightly lower share of panelists (24%) reported rising sales, a slightly higher share (51%) reported unchanged sales, and 24% reported falling sales. Partially due to the higher share of panelists reporting rising sales, the NRI has risen from 0 in the July survey to 12 in the current survey.

About 60% of panelists in the FIRE sector and 75% of panelists in the services sectors reported rising sales from foreign- based operations over the past three months, while 8% of panelists in the goods-producing sector and 17% of panelists in the TUIC sector reported rising sales. As a result, the NRIs for the services and FIRE sectors were 75 and 50, respectively, while the NRIs for the TUIC and goods-producing sector were 17 and -38, respectively. The goodsproducing sector had the greatest share of panelists reporting falling sales (46%), while only 10% of panelists in the FIRE sector reported falling sales, and no panelists in the TUIC and services sectors reported falling sales. In the July survey, the highest shares of panelists reporting rising sales were the FIRE sector (44%) and the TUIC sector (20%). The share of panelists reporting falling sales in the July survey ranged from 20% (the TUIC sector) to 42% (the goodsproducing sector), although no panelists in the FIRE sector reported falling sales.

Percent of total respondents (33) reporting that over the past three months their company’s share of sales from foreign-based operations has been:
Sector	Rising	Unchanged	Falling	Net Rising	Number Responding
Total	33	45	21	12	33
Goods-Producing	8	46	46	-38	13
TUIC	17	83	0	17	6
FIRE	60	30	10	50	10
Services	75	25	0	75	4

GDP Forecast Underpinning Current Planning

In the October survey, about 62% of panelists forecast that real GDP is likely to grow from the third quarter of 2012 to the third quarter of 2013 at a rate between 1.1% and 2.0%, suggesting moderately slow growth. About 31% of the panelists forecast real GDP growth between 2.1% and 3% and only 5% of the panelists forecast that real GDP growth will exceed 3%. Although the various prior surveys asked panelists to forecast over different one-year time periods, the panelists’ one-year horizon has become somewhat less optimistic than in the prior survey. For example, a significant difference between the July survey and the October survey is the share of panelists forecasting growth of between 1.1% and 2.0% over different one-year horizons: 62% of the panelists held this view of real GDP growth in the October survey, while only 29% of panelists held this view in the July survey. Also, a smaller share of panelists forecast that real GDP growth will exceed 2% over the next year relative to the panelists in the July survey (36% in the October survey vs. 61% in the July survey). On a positive note, however, a smaller share of panelists suggest that real GDP growth will be 1% or below over the next year (3% in the October survey vs. 11% in the July survey) and no panelists forecast negative GDP growth.

Percent of total (66) reporting that real GDP will grow from the second quarter of 2012
to the second quarter of 2013 by:
	<0.0%	0.0% to 1.0%	1.1% to 2.0	2.1% to 3.0%	3.1% to 4.0%	> 4.0%
October 2012	0	3	62	31	5	0
July 2012	0	11	29	56	5	0
April 2012	0	4	19	63	13	2
January 2012	2	5	28	60	5	0
October 2011*	3	12	70	16	0	0

If the Bush-era tax cuts expire in late December and the automatic government spending reductions take place in early January, by how much will your sales be affected?

The panelists express significant concerns about the impact on their sales if Bush-era tax cuts expire in late December and the automatic government spending cuts take place in early January. Indeed, 63% of the panelists expect sales to fall under this scenario—45% believe that sales would fall by 10% or less, but 18% believe that sales could fall by more than 10%. These results are similar to those in the prior survey in July, in which 65% of panelists expected sales to fall under this scenario—50% believed that sales would decrease by less than 10% and 15% believed that sales would decrease by more than 10%. About 33% of the panelists believe that sales would stay about the same (similar to the 30% who held this view in the July survey). Only 3% believe that sales will increase under this scenario, down from 6% in the prior survey. Consequently, although the panelists continue to be concerned about the scenario in which the Bush-era tax cuts expire and the automatic government spending reductions take place, the concerns have not worsened since the last survey, and remain stable.

The perspective that sales would fall is held by 76% of the panelists in the goods-producing sector, which is down from 83% in the prior survey. A higher share of panelists in this survey (25%) suggest that sales will stay about the same, which is an increase from the prior survey (17%). About 67% of the panelists in the TUIC sector believe that sales would fall under this scenario, which is down from 100% in the prior survey. A higher share of TUIC panelists in this survey believe that sales would stay about the same (33%) relative to the prior survey (0%). About 54% of the panelists in the FIRE sector believe that sales would fall, which is similar to the share who held this view in the last survey. A lower share of panelists believe that sales would stay the same in this survey (31%) relative to the prior survey (40%). The share of panelists in the FIRE sector forecasting that sales could rise has increased from 7% in the July survey to 15% in the October survey. About 57% of panelists in the services sector forecast that sales would fall, which is similar to the 42% which held this view in the last survey, and a similar share believe that sales would stay the same (44% in the October survey vs. 47% in the July survey).

Percent Reporting
	Total	Goods Producing	TUIC	FIRE	Services
Increase more than 10%	0	0	0	0	0
Increase 10% or less	3	0	0	15	0
Stay about the same	33	25	33	31	44
Decrease 10% or less	45	63	47	31	38
Decrease more than 10%	18	13	20	23	19
NRI (all increases less decreases)	-60	-75	-67	-38	-56
Number reporting	60	16	15	13	16

Do you expect that the European crisis will indirectly affect your company’s sales?

Over half of the panelists expect that the European crisis will indirectly affect their company’s sales, which is down from the two-thirds of the panelists that held this view in the prior survey. Although 80% of panelists in the goodsproducing sector hold this view, 92% of the panelists held this view in the prior survey. In the TUIC sector and the FIRE sector, 50% and 63% of the panelists hold this view, which is similar to the results in the prior survey. The share of panelists in the services sector expecting that the European crisis will indirectly affect their company’s sales has fallen from 57% in the July survey to 29% in the current survey.

Percent Reporting
	Total	Goods Producing	TUIC	FIRE	Services
Yes	56	80	50	63	29
No	44	20	50	38	71
Number reporting	61	15	16	16	14

By how much has the European crisis directly affected your company’s sales year-to-date in 2012?

About 34% of the panelists indicate that the European crisis has directly led to a decrease in their company’s sales yearto- date in 2012, which, on an optimistic note, is less than the 47% who indicated a decline in their sales in the prior survey. About 60% indicate that their sales have stayed the same, which is a higher share of panelists than the 51% who indicated this in the prior survey. As a result, the NRI has risen from -45 in the prior survey to -28 in the current survey. This may be due to increased stability in the trajectory of the European crisis or an evolution in the strategy of firms with European sales. The FIRE sector and the services sector are the two sectors in which the greatest share of panelists (86% and 83%, respectively) indicate that their sales have stayed about the same. In the prior survey, the FIRE sector and the TUIC sector were the two sectors in which the greatest share of panelists indicated that their sales had stayed the same (71% and 56%, respectively). In the current survey, the goods-producing sector and the TUIC sector are the sectors in which the greatest share of panelists (75% and 42%, respectively) have indicated that their sales have fallen. In the prior survey, the goods-producing sector had the largest share of panelists (78%) reporting that their sales had fallen, followed by the services sector (47%) and the TUIC sector (44%). Consequently, the FIRE and services sector show improvement relative to the prior survey due to a higher share of panelists reporting that sales have stayed about the same and a lower portion reporting that sales have fallen, while the goods-producing sector and the TUIC sector report results which are basically similar to the prior survey.

Percent Reporting
	Total	Goods Producing	TUIC	FIRE	Services
Increase more than 10%	0	0	0	0	0
Increase 10% or less	6	8	8	7	0
Stay about the same	60	17	50	86	83
Decrease 10% or less	34	75	42	7	17
Decrease more than 10%	0	0	0	0	0
NRI (all increases less decreases)	-28	-67	-33	0	-17
Number reporting	50	12	12	14	12

By how much do you expect the European crisis to directly affect your company’s sales over the next 6 months?

The survey results suggest less concern regarding the impact of the European crisis on sales over the next six months, possibly due to corporate adjustments to mitigate risk or perceptions of greater stability in the European crisis. In the current survey, about 37% of panelists expect that the European crisis will lead to a decrease in their company’s sales over the next six months; half of the panelists held this view in the July survey. About 57% of panelists in the current survey believe that the European crisis will result in the sales of their firm remaining the same over the next six months; this is higher than the 47% of panelists who held this view in the July survey, but much lower than the 77% of panelists who held this view in the April survey. As a result of the falling share of panelists expecting a decline in sales, the NRI has risen from -49 in the July survey to -31 in the current survey. In the goods-producing sector, 70% of the panelists believe that sales will fall over the next six months due to the European crisis (down from the 86% who held this view in the prior survey). About one quarter of the TUIC sector panelists believe that sales will fall over the next six months (down from 58% in the last survey). This view is held by 21% of FIRE sector panelists (down from 38% in the last survey), and 33% of the services sector panelists (an increase from 27% in the last survey).

Percent Reporting
	Total	Goods Producing	TUIC	FIRE	Services
Increase more than 10%	2	0	0	7	0
Increase 10% or less	4	8	0	7	0
Stay about the same	57	23	75	64	67
Decrease 10% or less	31	62	25	14	25
Decrease more than 10%	6	8	0	7	8
NRI (all increases less decreases)	-31	-62	-25	-7	-33
Number reporting	51	13	12	14	12

Do you expect that the third round of quantitative easing (QE3) will indirectly affect your company’s sales over the next 6 months?

Almost two-thirds of the panelists do not expect the third round of quantitative easing to indirectly affect their company’s sales over the next 6 months. The greatest shares of panelists holding this view are in the goods-producing sector (79% of panelists), the services sector (79% of panelists), and the TUIC sector (75% of panelists). The panelists in the FIRE sector, however, have a different view in that 73% of panelists expect that the third round of quantitative easing will indirectly affect their company’s sales over the next six months, possibly due to the exposure of this sector to mortgage rates.

Percent Reporting
	Total	Goods Producing	TUIC	FIRE	Services
Yes	36	21	25	73	21
No	64	79	75	27	79
Number reporting	59	14	16	15	14

Industry Survey

Industry Survey October 2012 Highlights