Pay hikes rising despite stagnant sales: Survey

Businesses were more likely to boost pay in the fourth quarter and confidence in U.S. growth continued, even as sales and profit growth flattened.

A quarterly National Association for Business Economics survey released Monday found that 49 percent of firms reported raising salaries or wages in the quarter. Of the 148 respondents, 47 percent said sales rose in the same period, slightly down from 51 percent in the previous quarter.

The survey was conducted in December, one day after the Federal Reserve voted to raise its interest rate target for the first time in more than nine years. The results come as recent energy sector pain, manufacturing weakness and other data raise concerns about the U.S. economy despite a solid string of job growth.

The survey results did not reflect gloomy recent narratives and showed stable employment conditions. Fifty-eight percent of firms plan to increase wages in the current quarter.

Nearly half of respondents expect sales to rise in that period. Only 9 percent anticipate sales will fall, down from 10 percent in the previous survey.

Profit-margin growth did stagnate in the fourth quarter, as the number of panelists that reported rising margins equaled the share that said margins fell. Additionally, 19 percent of firms expect margins will drop in the current quarter, the highest since the question was first asked in July 2014.

Economic growth expectations among respondents have also slipped. Only 4 percent of firms believe real gross domestic product growth will top 3 percent from the fourth quarter of 2015 to the fourth quarter of 2016, down from 30 percent who expected that increase as of last April’s survey.

Twenty-six percent of panelists expect real GDP will grow by less than 2 percent in that same period.

Respondents seemed unfazed by the Fed’s decision to tighten policy. More than 60 percent said the rate hike would not have a “material impact” on their firms, while only 16 percent said it would negatively affect business.

[“source -pcworld”]