NABE Finds Costs Rising, Passed on to Customers

The cost of doing business is increasing and those hikes are being passed on to consumers, the quarterly National Association for Business Economics survey, released today, indicated.

Material costs were higher in the quarter, according to a record 75% of respondents, the highest share since the question was first asked in 1994. While the price of material rose, wages were steady, as only one in four said wages increased last quarter, down from 36% in the first quarter. And non-labor input prices are expected to continue rising next quarter, according to 77% of those surveyed, while only 2% expect a decrease.

More than one in three respondents (35%) noted their firms raised prices last quarter, while 41% expect to raise prices in this quarter.

Also hurting the economy, 41% of those surveyed pointed to tighter credit as a hindrance to business, with almost one in three applauding Federal Reserve actions. Capital spending was marginally lower and near its historical average, NABE said.

On the positive side, fewer respondents see “further substantial slowdown in housing markets over the next six months.” Nearly half of those surveyed (44%) expect GDP to grow at an annual rate above 1% in the second half.

Employment levels have been fairly steady, with about one in four firms saying their firms are hiring, and about half as many saying they are cutting jobs.

“Respondents to the July NABE Industry Survey were more varied than in the decidedly downbeat April survey about recent results and the next few quarters, but they were far from ebullient,” said Ken Simonson, chief economist, Associated General Contractors of America.

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