NABE Business Conditions Survey

October 2018

Profits and Prices Up on Solid Sales Growth in Third Quarter of 2018; NABE Panel Expects Additional Investment and Job Gains

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

The October 2018 NABE Business Conditions Survey report presents the responses of 127 NABE members to a survey on business conditions in their firms or industries conducted between September 26 and October 11, 2018, and reflects third-quarter results and the near-term outlook. 

COMMENTS: “The results of the October 2018 NABE Business Conditions Survey indicate firms experienced improved profit margins in the third quarter of 2018, with solid sales growth and rising prices offsetting cost increases,” said NABE Business Conditions Survey Chair Sara Rutledge, independent real estate economist and data science research fellow at StratoDem Analytics. “Panelists’ expectations for growth in inflation-adjusted gross domestic product—real GDP growth—over the next 12 months are anchored in the 2.1%-to-3.0% range, with 16% of panelists anticipating stronger growth, and 10% expecting slower—but still positive—economic growth. Tight labor market conditions with skilled labor shortages continue to push firms to raise wages, increase training, and consider additional automation.

“The 2017 Tax Cuts and Jobs Act has not broadly impacted hiring and investment plans at panelists’ firms, although panelists from the goods-producing sector do report some incidence of increased investments, and a shift toward hiring and investments from abroad to the U.S.,” added Rutledge. “While nearly eight out of 10 panelists indicate that trade policy changes are not impacting hiring, investment, and/or pricing, a larger share of panelists from the goods-producing sector compared to other sectors reports that adjustments are being made at their firms, with higher prices and delayed investments cited as the most prevalent changes.”


  • The share of panelists reporting rising sales at their firms increased for a fourth consecutive quarter. Sixty-one percent of respondents report higher sales—the largest share since the January 2014 survey. The percentage of respondents reporting falling sales decreased to 6%, and the remaining 34% indicate no change over the past three months. The Net Rising Index (NRI)—the percentage of panelists reporting rising sales minus the percentage reporting falling sales—rose to 55, up from 50 in July, and the highest NRI value since the October 1994 survey.
  • Expectations regarding future sales increases are less widespread than in the previous survey. Sixty-one percent of respondents expect sales to increase, down from 68% in July, while the share anticipating falling sales also declined, to 6%. As a result, the NRI fell to 56, lower than the NRI of 60 in July, but still above all the readings since the April 2015 survey. Goods-producers remain the most optimistic, as 80% of respondents from that sector expect sales to rise, and none from that sector expect sales to decline.
  • More than one-third of respondents—37%—report rising profit margins at their firms, the highest percentage since the April 2012 survey. The share of panelists reporting falling profits increased to 8%, up slightly from 6% in the previous survey. The NRI rose to 29, the highest value since April 2011. Consistent with views expressed in the July 2018 survey, 37% of respondents expect rising profit margins at their firms over the next three months, resulting in a forward-looking NRI of 29.
  • The NRI for prices charged rose from 34 in July to 37 in October—the highest reading since early 2006. The NRIs for the transportation, utilities, information, communications (TUIC) and finance, insurance, and real estate (FIRE) sectors are up sharply in October from July, with the NRI for the goods-producing sector holding steady, and the NRI for the services sector falling slightly. The share of respondents from the goods-producing sector reporting rising prices is larger than the shares of respondents from the other sectors reporting rising prices.

DOWNLOAD FULL SURVEY REPORT  (Members only - sign-in required)