Business Conditions Survey

January 2022

Latest NABE Survey Panel Sees Strong Sales and Rising Investment, But Pressure from Labor and Material Shortages is Increasing


The January 2022 NABE Business Conditions Survey report presents the responses of 84 NABE members to a survey conducted January 3-12, 2022, on business conditions in their firms or industries, and reflects fourth-quarter 2021 results and the near-term outlook.


COMMENTS: “The results of the January 2022 Business Conditions Survey show that conditions remained strong during the fourth quarter of 2021,” said NABE Vice President Julia Coronado, president and founder, MacroPolicy Perspectives LLC. “About two-thirds of respondents—65%—report their firms experienced rising sales in the quarter—a share in line with those in the last three surveys, and among the highest shares to report rising sales in the survey’s 40-year history.”

“The positive results and outlook come despite clearly visible shortages, particularly labor shortages,” added NABE Business Conditions Survey Chair Jan Hogrefe, chief economist, Boeing Commercial Airplanes. “Fifty-seven percent of respondents report skilled labor shortages at their firms, while nearly one-quarter of respondents reports shortages of unskilled labor. Both shortages have grown steadily more widespread over the past year.

“We are also seeing COVID-19 return as the biggest downside risk, cited by 36 percent of panelists,” continued Hogrefe. “This is slightly ahead of rising cost pressures as the leading downside risk. In addition, about one in six respondents cites rising interest rates as the top downside risk.”



• Almost two-thirds (65%) of respondents report that sales at their firms increased in the fourth quarter (Q4) of 2021—unchanged from the October 2021 survey. A mere 3% report falling sales. The forward-looking NRI—the percentage of panelists anticipating increased sales minus the percentage anticipating decreased sales over the next three months—is 50, down 1 point from the October survey, and lower than in the spring and summer of 2021.

• The survey results reflect a decline in the NRI for profit margins, from 25 in October to 19 in January 2022, based on a larger number of respondents that reported falling profit margins at their firms in Q4. The NRI for expected profit margins in the next three months slipped to 10, its lowest reading since the July 2020 survey.

• The NRI for prices charged in Q4 2021 continued to climb, rising 13 points since the October 2021 survey to its highest reading in the 40-year history of the survey. No panelists report price declines in the fourth quarter. Respondents from the goods-producing sector have the highest expectations for price increases in the next three months. No panelists from the services, finance, insurance, and real estate (FIRE) or transportation, utilities, information, and communications (TUIC) sectors anticipate prices to fall in Q1 2022.

• The NRI for materials costs in Q4 2021 is 69, the second-highest reading since 2008, and just slightly lower than the NRI of 70 in Q3 2021. No respondents report materials costs declined.

• The percentage of respondents indicating that wages rose in Q4 increased to 68% in January, up from 58% in the October survey. This is the sixth consecutive survey in which the NRI for wages has increased. In addition, for the third consecutive survey, no respondents report that wages fell at their firms.

• The share of respondents reporting rising employment at their firms during the past three months rose two percentage points from 30% in the October survey to 32% in the January survey. The percent of respondents reporting falling levels of employment is unchanged at 7%. The share of respondents expecting employment at their firms to increase in the next three months rose 20 percentage points, from 30% in the October survey to 50% in the January survey.

• Capital spending has its highest NRI reading in seven years at 42, up from 33 the previous quarter. The goodsproducing sector has the highest reading, with 83% reporting rising capital spending in Q4 2021.

• The NRI for equipment, information, and communications technology spending is 47, the highest reading since the April 2021 survey, with half of respondents noting rising activity in Q4 2021. The goods-producing sector has the highest NRI among the sectors, with 78% of respondents reporting increases in spending and none reporting decreases.

• The NRI for capital spending on structures turned negative for the first time since the April 2021 survey. Most respondents (61%) note no change in activity, while 22% report falling spending, and 16% cite rising spending. The goods-producing sector has the highest reading, with half of respondents from that sector citing rising capital spending on structures.

• The January 2022 survey reflects increased shortages; only 24% of respondents reported no shortages at their firms as compared to 35% of respondents in the October 2021 survey. The most pressing shortage is labor. More than half of respondents in the January 2022 survey, 57%, report skilled labor shortages, up from 47% in the October 2021 survey. Unskilled labor shortages are reported by 24% of respondents in the January 2022 survey compared to 11% in the October 2021 survey, reflecting the largest increase among all the shortages surveyed.

• Over one-third (36%) of respondents indicate that the rising number of COVID-19 cases is the biggest downside risk to their company’s outlook, up from 28% in the October survey. Thirty percent of respondents cite increasing cost pressures and 16% note higher interest rates as the biggest downside risks. Twelve percent indicate that supply chain disruptions is the biggest downside risk to their company’s outlook, down from 20% in the October survey.

• Thirty-one percent of respondents cite having a lower number of COVID cases and less restrictions as the biggest upside risk to their company’s outlook. Twenty-one percent of respondents indicate faster-than-expected ramping up of supply chains and 20% of respondents identify the rapid increase in people returning to the labor force as the biggest upside risks.

• Only 26% of respondents indicate that their firms were not facing a labor shortage. Labor shortages continue to be reported broadly in the goods-producing and FIRE sectors. The share of respondents expecting labor shortages to abate in 2022 declined to 33% from 36% in the October survey. Almost one-third of respondents expects shortages of workers to continue into 2023 or beyond.

• Compared to the shortage of labor, there is more uncertainty with respect to supply-chain issues. However, among those who had an expectation, there was a relative concentration of expectations that material/input shortages would begin to abate during the second half of 2022, with 26% of respondents providing this estimate. Eleven percent of respondents anticipate that input shortages will persist into 2023 or later.

• Higher business costs are leading to higher costs of final goods and services. Sixty-three percent of respondents indicate that their firms were experiencing higher costs, and were passing at least some of those costs to their customers. Only 4% indicate they were not experiencing cost increases.

• Nearly two-thirds of respondents report that sales at their firms are at pre-crisis volumes. Thirty-six percent of respondents indicate that their firms’ sales volumes have returned to their normal level, while 28% of respondents cite that their sales volumes “never dropped.” Five percent of respondents anticipate that sales will return to their “normal level of operations” in the first half of 2022 and another 13% in the second half of this year.

• A minority of businesses are undertaking significant changes to business operations due to climate change. A little more than one-third of respondents indicate that their firms are making product or service offering changes. One-third notes that their firms are monitoring possible regulatory changes associated with climate change policy. Eleven percent of respondents report that their firms are making changes to office/plant locations due to potential natural-hazard risk.


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