Business Conditions Survey

October 2022

NABE Survey Panel Indicates Further Slowing of U.S. Economy As Sales Growth Decelerates and Profit Margins Contract


The October 2022 NABE Business Conditions Survey report presents the responses of 55 NABE members to a survey conducted October 3-10, 2022, on business conditions in their firms or industries, and reflects third-quarter 2022 results and the near-term outlook.

COMMENTS: “The results of the October 2022 NABE Business Conditions Survey show indications of a continued slowing of the U.S. economy,” said NABE President Julia Coronado, founder and president, MacroPolicy Perspectives LLC. “More than five out of 10 panelists indicate that the U.S. economy has a more-than-even likelihood of entering a recession in the next 12 months. Eleven percent believe the U.S. economy is already in a recession.” 

“Approximately one-third of respondents reports rising sales at their firms during the third quarter of 2022, compared to nearly two-thirds at the end of last year,” added NABE Business Conditions Survey Chair Jan Hogrefe, chief economist, Boeing Commercial Airplanes. ”Profit margins have contracted, on balance, with more respondents reporting falling rather than rising profit margins for the first time since mid-2020.

“Cost challenges, in particular through the wage channel, remain as well,” continued Hogrefe. “The survey findings show the third-highest percentage of respondents reporting rising rather than falling wages in the survey’s history. The results also indicate slightly less pressure on materials costs than in the July 2022 survey.”



  • Sales growth slowed sharply during the third quarter of 2022 (Q3 2022). The Net Rising Index (NRI) for sales—the percentage of panelists reporting rising sales minus the percentage reporting falling sales—in the previous quarter fell to 8, its lowest level since mid-2020. The outlook deteriorated as well, although the share of respondents that expects an increase in sales is twice as high as the share expecting decreasing sales.
  • Profit margins declined at a similar pace as reported in the July 2022 survey. The NRI is -10, with more panelists reporting falling profit margins than rising ones. The outlook for the next three months anticipates further profit margin contraction on balance, with a sharply lower forward-looking NRI of -17.
  • More than half (52%) of respondents report that the prices their firms charge increased in Q3 2022, up nine percentage points from the July survey. Looking ahead, 44% of respondents expect the prices their firms charge to increase, down six percentage points from the July survey.
  • The NRI for materials costs in Q3 2022 is 52, a 24-percentage point drop from the record-high reading for this question in the July survey. The forward-looking NRI for materials costs also fell, declining to 43 in the current survey from 56 in the July survey.
  • Sixty-three percent of respondents report that wages rose at their firms over the past three months, up from 55% in the previous survey. The NRI is 62—its third highest reading on record. The NRI for expected wage costs in the next three months decreased from 51 in the July survey to 43 in October, matching its lowest reading since April 2021.
  • The NRI for employment is 22, down from 30 in the July survey. The share of respondents that notes rising employment at their firms over the past three months fell from 38% to 33%. The share of respondents that anticipate employment to rise at their firm over the next three months is 22%, compared to 24% in the July survey and well below the 50% in the January 2022 survey.
  • The share of respondents whose firms increased capital spending in the past three months rose slightly in Q3 after having declined in Q2. The NRI for capital spending rose to 27 from 22. This reading is in line with historical non-recession averages. The improvements carried into the forward-looking NRI which rose from 23 to 27 in the October
  • The NRI for equipment, information, and communications technology spending rose 8 points to 46, driven by an increase in the share of panelists reporting rising investment at their firms. The forward-looking NRI also improved, with a large movement of responses from the unchanged to the rising category amid a small increase in the share of
    respondents indicating falling investment.
  • More respondents indicate capital spending on structures declined than rose during Q3 2022. The NRI is -3, placing the NRI in negative territory for the first time since the January 2022 survey.
  • Record-high percentages of panelists continue to report shortages of materials inputs and unskilled labor, in a series dating back to 1987. More than one in five respondents (22%) report a shortage of intermediate inputs, while 16% report a shortage of raw material inputs. Almost a quarter of respondents (24%) reports a shortage of unskilled labor, while
    45% report a shortage of skilled labor.
  • About one in five (22%) panelists expects labor shortages at their firms to last until the second half of 2023 and beyond. Thirteen percent of panelists expect material input shortages at their firms to abate in the second half of 2023 or later.
  • Overall, panelists report that the biggest downside risks to their firm’s outlook are higher interest rates (cited by 31% of respondents) and increased cost pressures (16%), followed by supply-chain disruptions (7%) and rising COVID-19 cases (7%).
  • Panelists report the biggest upside risks for their firms are lower-than-expected interest rates (cited by 24% of respondents), falling input costs (17%), faster-than-expected ramping up of supply chains (11%), a rapid increase in people returning to the labor force (7%), and lower COVID-19 cases and less restrictions (7%).
  • Respondents indicate that their firms continue to pass on at least some cost increases to consumers. Sixty-nine percent indicate all or some costs are passed on, one quarter indicates costs are not passed on to consumers, and 5% say they don’t see cost increases.
  • Nearly two-thirds (64%) of respondents indicate that the U.S. is either already in a recession (11% of respondents) or has a more-than-even likelihood of entering a recession in the next 12 months (53% of respondents).


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