NABE Business Conditions Survey

April 2021

NABE Panelists Show Increasing Optimism about Economic Growth over the Next 12 Months, as Profit Margins Rise at More Firms and Expectations for Hiring Grow More Widespread


The April 2021 NABE Business Conditions Survey report presents the responses of 97 NABE members to a survey conducted April 5-13, 2021, on business conditions in their firms or industries, and reflects first-quarter results and the near-term outlook.


“Results of the April NABE Business Conditions Survey show that conditions continued to improve during the first quarter of 2021. Two thirds of panelists indicate that the vaccine rollout and the new administration have had a positive impact on their view of the economy,” said NABE President Manuel Balmaseda, CBE, chief economist, CEMEX. “This optimism is broad-based by sector. Furthermore, respondents see a stronger outlook for growth in inflation-adjusted gross domestic product, or real GDP, over the year ahead than they expected three months ago. Thirty-five percent of panelists anticipate real GDP to expand by at least 6% from the first quarter of 2021 through the first quarter of 2022. That’s an increase from just 5% of panelists in the January survey who expected growth in calendar year 2021 to equal 6% or more.”

“Nearly two-thirds of respondents report their firms’ sales increased in the last three months, up from just over half of respondents reporting increases in the January survey,” added NABE Business Conditions Survey Chair Eugenio J. Aleman, chief economist, Energy Information Administration (EIA).

“In addition, the percentage of respondents indicating that their firms charged higher prices last quarter rose to 34% from 24% in the January survey. “Respondents are optimistic about the near-term outlook for employment,” continued Aleman. “More respondents from all sectors expect their firms will add jobs than reduce headcount in the next three months.” 




• Respondents anticipate stronger growth in real GDP growth over the year ahead (ending in the first quarter of 2022). Ninety-five percent of panelists anticipate real GDP to expand by at least 3 percent from the first quarter (Q1) of 2021 through Q1 2022.

• Almost two-thirds (65%) of respondents report that sales at their firms increased in Q1 2021, an increase from the 51% in the January survey. The share reporting a decrease in sales declined slightly, from 13% in January to 12% in April. As a result, the Net Rising Index (NRI) for sales—the percentage of panelists reporting rising sales minus the percentage reporting falling sales—climbed to a two-and-a-half-year high of 53, up from a reading of 38 in the January survey and 33 in the October 2020 survey. The NRI for expected sales in the next 3 months (69) is the highest since NABE began tracking expectations for sales in 2014.

• Profit margin increases were more widespread in Q1 2021, with more respondents reporting profits rising than falling. The NRI for profit margins rose 9 points to 23, up from 14 in the January survey. The share of respondents reporting rising profit margins increased slightly from 30% in January to 32% in April, while the percentage reporting falling margins declined 7 percentage points—from 16% in January to 9% in April.

• The NRI for prices charged more than doubled in April from its January reading to 31, up from 15. The largest change is in the percentage of respondents indicating prices charged rose at their firms during Q1—34% compared to 24% in the January survey. Price declines are reported by 3% of respondents, a smaller share than in January, when 9% reported their firms reduced prices. Although the NRI for prices charged by goods-producing firms is unchanged at 71, the index for finance, insurance, real estate (FIRE) sector firms moved strongly into positive territory with an NRI of 21 compared to a reading of -12 in January. The NRI also rose for the services and the transportation, utilities, information, communications (TUIC) sectors.

• The NRI for materials costs increased to 49 in Q1 2021—the highest reading since Q3 2018. All sectors have positive NRIs, led by goods-producers at 93 and followed by the TUIC sector at 90. The NRI for expected costs rose from 34 in January to 45 in April. The TUIC sector has the highest expectation for cost increases in the next three months, registering a forward-looking NRI of 60.

• The NRI for wages and salaries continued to rebound, registering a reading of 29 in April, up from 19 in the January survey. The upward movement in the index is due to two factors. There was an increase in the share of respondents indicating that wages rose at their firms, from 28% in January to 31% in April. In addition, the share reporting that wages declined at their firms fell to 2%, down from 9% in January.

• Hiring grew more prevalent for a third consecutive quarter, with the NRI for employment rising from 7 in Q4 2020 to 9 in Q1 2021. Twenty percent of respondents cite increased employment at their firms during Q1, with 69% indicating that hiring was unchanged and 11% reporting declines. The FIRE and goods-producing sectors registered positive NRIs for employment. The near-term outlook remains positive, with the forward-looking NRI for employment rising from 21 in January to 36 in April. Respondents from all sectors anticipate that their firms will add workers in the next three months.

• The shares of respondents indicating shortages in skilled labor, intermediate inputs, raw material, and capital goods are larger compared to those in the January survey. Fifty-four percent of respondents report no shortages of inputs in Q1 2021—smaller than the 56% in the January survey.

• The NRI for capital spending is 32, more than double its reading of 15 in January and the highest level since Q3 2019. Thirty-two percent of respondents report that capital spending rose at their firms during Q1 2021, up from 28% in the previous quarter, with the percentage citing declining investments decreasing from 13% to 0.

• The NRI for equipment, information, and communications technology spending rose 17 points in Q1 2021 to 47, up from 30 in Q4 2020, and the highest reading since Q3 2018. The percentage of respondents reporting increased activity rose from 39% to 47%, with the share citing declines dropping from 9% to 0.

• The NRI for capital spending on structures increased but remains in negative territory for a fifth consecutive survey. The NRI is -5 in April, up from -16 in January and -25 in October.

• Over three-fourths (77%) of respondents report that their firms have not implemented any cuts or freezes over the last three months in employment and/or benefits because of the COVID-19 pandemic.

• Respondents’ near-term outlook for their firms improved markedly in April compared to the January survey. Sixty percent of respondents report a “Better” outlook compared to a month ago, up from 34% who reported the same in January.

• Twenty-seven percent of respondents report that sales at their companies are at “more than 100% of pre-crisis levels” in the current survey, up from 23% in the January survey. Forty-three percent of the panelists note sales volumes are at “76%-100% of pre-crisis levels.”

• Nearly half (48%) of respondents reports that sales have already returned to their normal level of operations, up from 32% in January. Twenty-one percent expect this to occur by the end of 2021.

• Nearly a quarter (24%) of respondents indicates that their firms made no change in work-from-home policies as result of the pandemic, led by the services sector. Another 6% of respondents’ firms allowed employees to work from home initially, but have required that most or all employees return to the workplace at this time.

• The vaccine rollout and a new presidential administration have had a positive impact on respondents’ outlook for their firms. Two-thirds of panelists indicate that these factors have had a positive effect with respect to sales, hiring, capex, etc., at their firms, up from 37% in the January survey. The optimism is broad-based by sector.

• Sixty-three percent of respondents indicate that the Biden Administration’s American Rescue Plan positively changes expectations about the economy’s future.

• Respondents’ views regarding the Biden Administration’s proposed American Jobs Plan (AJP) and its impact on the economy differ more broadly. Forty-one percent cite indicate the AJP would have a positive impact, while nearly a quarter (24%) indicates the plan will have negative effects on the economy.

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