NABE Business Conditions Survey

April 2018 

Sales Strong with Costs and Wages Rising in First Quarter of 2018; NABE Panel Expects Steady Job Gains Through Mid-Year

NOTE: This is a summary of the survey.  NABE Members can download the full report here

The April 2018 NABE Business Conditions Survey report presents the responses of 107 NABE members to a survey on business conditions in their firms or industries conducted between March 22 and April 3, 2018, and reflects first-quarter results and the near-term outlook. 

COMMENTS: “The results of the April 2018 NABE Business Conditions Survey show continued increases in sales and healthy profit margins, but also suggest that gains in profit margins slowed during the first quarter of 2018 as material costs and wages increased,” said NABE Business Conditions Survey Chair Sara Rutledge, independent real estate economist. “The panel’s outlook for growth in the overall economy remains overwhelmingly positive, and more upbeat than a year ago, while labor market conditions are increasingly tight. When questioned about the impact of recent policy changes, about two-thirds of panelists indicate their firms are not adjusting hiring and investment plans after the passage of the 2017 Tax Cuts and Jobs Act and the introduction of steel and aluminum tariffs.

“April survey results suggest widespread wage growth and increasing shortages of skilled labor,” added Rutledge. “The first quarter of 2018 registered the highest Net Rising Index for wages and salaries since NABE began tracking the data in April 1982, and the largest share of respondents reporting shortages of skilled labor in nearly ten years.”


  • For the first time since 2015, more than half of the panelists participating in the April 2018 NABE Business Conditions Survey indicate that sales at their firms rose in the first quarter. Fifty-four percent of respondents report gains while only 11% report falling sales. The Net Rising Index (NRI)--the percentage of panelists reporting rising sales minus the percentage reporting falling sales--rose from 30 in the fourth quarter of 2017 to 43 in the first quarter of 2018-the highest NRI reading since July 2014.
  • Just over one-third of respondents report rising profit margins at their firms, matching the share that reported rising margins in the January survey, and the highest level since January 2015. Similarly, 34% of respondents expect profit margins at their firms to rise in the next three months, the highest percentage since July 2015. While this is slightly below the NRI of 23 in the January survey, it remains higher than any other NRI reading since January 2015. The NRI for expected profits over the next three months is consistent with the average of the previous four surveys.
  • The NRI for wages and salaries rose from 48 in January to 55 in the April survey, the highest index reading since NABE began analyzing the data in April 1982. Wage increases are likely to remain strong over the next three months, as the NRI for expected wage costs continued strong--slipping only slightly from 58 in January to 57 in April.
  • Job growth was widespread at respondents' firms over the first quarter of 2018, with additional increases likely over the next three months. The NRI for employment increased from 18 in January to a three-year high of 26 in April, and the forward-looking NRI rose slightly, from 27 in January to 30 in April.
  • The percentage of respondents reporting shortages of skilled labor at their firms rose for a fifth consecutive quarter, to 45%--the highest percentage since the July 2008 survey. The share reporting difficulty hiring unskilled labor, while still small, has also continued to increase, doubling to 16% in April from 8% in January.
  • A majority (65%) of respondents indicates the Tax Cuts and Jobs Act did not cause their firms to change hiring or investments plans. Compared to other sectors, goods-producing firms report they are more likely to be implementing changes, with 26% of respondents from that sector reporting accelerated investments, 11% reporting accelerated hiring, and 11% reporting the redirection of both hiring and investments to the U.S.
  • A large majority of respondents--68%--indicates their firms are not adjusting plans for hiring, investing, or pricing as a result of changes in tariffs on steel and aluminum, and/or in anticipation of potential retaliation for these tariffs. The goods-producing sector is the only sector to report notable adjustments, with 21% of firms planning to raise prices, and 11% planning to accelerate investments.
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