WASHINGTON – Rising sales helped boost hiring at U.S. businesses in the last three months of 2014, and companies are optimistic that continued improvement in business conditions will bring increased employment and wages in the current quarter, a new survey shows.
And many businesses expect the steep drop in oil prices in recent months to have a positive impact on them this year, according to the survey released Monday by the National Association for Business Economics.
Fifty-four per cent of the 93 respondents to the quarterly survey said sales at their companies increased in the October-December period. That was up from 49 per cent in the third quarter. As sales picked up, so did hiring. Thirty-four per cent of companies responding said they hired more workers during the fourth quarter, about the same as in the second and third quarters.
Businesses said the outlook for the January-March period is strong. Fifty-one per cent of respondents said they expect wages and salaries to increase at their companies — up sharply from 34 per cent in the fourth-quarter survey. Thirty-six per cent said they expect their companies to hire more workers, up from 31 per cent previously.
Finance, insurance and real estate companies were most likely to say they expect employment increases, at 52 per cent; transportation, utilities and communications firms were the least likely, at 15 per cent. Only 7 per cent of respondents expect employment declines at their companies in the first quarter.
“Business conditions continued to improve in the fourth quarter of 2014,” NABE President John Silvia, the chief economist for Wells Fargo Securities, said in a statement. “There are strong expectations for the first quarter, especially for jobs and wages. … Moreover, price and cost pressures appear to be subdued.”
There was a sharp decline in the number of companies reporting they raised prices in the October-December period, to 16 per cent from 25 per cent in both the second and third quarters. Higher prices were reported most frequently by respondents from the transportation, utilities and communications sector, at 25 per cent. Nearly two-thirds of respondents — 65 per cent — expect no change in the prices their companies will charge in the first quarter, close to 66 per cent in the fourth-quarter survey.
The drop in oil prices was the financial shocker of 2014. In the first half of the year, the oil market looked just as it had the year before — and the two years before that. Crude oil was more than $100 a barrel and drivers in the U.S. were paying around $3.50 a gallon for gasoline. Now oil is around $45 a barrel and the average gas price is $2.07 a gallon.
Fifty-seven per cent of respondents in the NABE survey indicated that tumbling oil prices would be positive to some extent for their businesses this year, while only 18 per cent said they could have a negative impact. The decline is expected to benefit the manufacturing sector to a larger extent than others.
The survey, in this case conducted between Dec. 15 and Jan. 8, is intended to gauge business conditions at NABE members’ companies or industries. Forty-three per cent of the respondents were from companies with more than 1,000 employees.