POST Online Media Lite Edition



 

Net impact of tariffs on American companies not positive

Christian Fernsby |
The April 2019 NABE Business Conditions Survey report presents the responses of 116 NABE members to a survey on business conditions in their firms or industries, and reflects first-quarter results and the near-term outlook.

Article continues below




“The results of the April 2019 NABE Business Conditions Survey indicate that all respondents still expect the economic expansion to continue within the next 12 months,” said NABE Business Conditions Survey Chair Sam Kyei, CBE, chief economist, SAK Economics LLC.

“However, barely half of the panelists foresees growth in real gross domestic product to expand by more than 2% compared to two-thirds of respondents who expressed that view in the January 2019 survey.

“The share of respondents expecting slower growth at or below 2% jumped to nearly half from about a third in the previous survey.

“More panelists report rising sales and higher profit margins in their firms over the past three months than in the previous survey,” continued Kyei.

“At the same time, materials input costs remain elevated at respondents’ firms, especially goods-producing firms.

“Fifty-two percent of survey respondents report shortages of skilled labor at their firms, and the current tight labor market conditions continue to push firms to raise wages, increase training, and consider additional automation.

“While two-thirds (64%) of firms left their prices unchanged during the first quarter of the year, about a quarter (27%) saw increases in prices charged.”

“The net impact of tariffs on American companies is not positive, and the negative impacts are especially noted within the goods-producing sector,” added NABE President Kevin Swift, CBE, chief economist, American Chemistry Council.

“A year after the U.S. first imposed new tariffs on its trading partners in 2018, the recent tariffs have negatively affected more than one-fourth of respondents’ firms.

“Only 1% of respondents—those from goods-producing firms—indicate tariffs have had some positive impact on business conditions at their firms.

“In response to trade concerns, panelists from goods-producers all report their firms had made changes in sourcing, supply chains or other practices.

“In contrast, about three out of four respondents in other sectors had not made any changes.

“Regarding monetary policy, panelists generally see the Federal Reserve’s pause in raising short-term interest rates as being favorable to business conditions at their firms.”

All survey respondents expect the U.S. economy, as measured by the change in inflation-adjusted gross domestic product (real GDP), to increase over the next four quarters.

However, barely half (53%) of the panelists expects real GDP to rise by more than 2%, compared to 67% of respondents in the January survey.

The Net Rising Index (NRI) for sales—the percentage of panelists reporting rising sales minus the percentage reporting falling sales—is 37, a significant gain from the reading of 29 in January.

The change was about equally driven by an increase in the number of respondents reporting rising sales and a decline in the number reporting falling sales.

Expectations for sales increases over the next three months also improved significantly, with the NRI rising to 54 from 26 in January.

This brings these readings back in line with survey results from mid-2018.

Profit margin increases became more prevalent in the first quarter of 2019, although increases were not as widespread as respondents reported in mid-2018.

The share of respondents reporting rising profit margins increased to 32% from 23% in January, but a still-significant share reporting falling margins (15%) kept the NRI at just 17, well below the readings in the July and October 2018 surveys.

On net, prices charged rose during the first three months of 2019, and are expected to rise further during the next three months.

The NRI is highest for the goods-producing sector, from which the majority of respondents reports price increases both for the first quarter of 2019, and anticipates increases for the second quarter.

In contrast, the current NRI for the finance, insurance, and real estate (FIRE) sector is 0, while respondents from transportation, utilities, information, communications (TUIC) sector firms expect a slight decline in prices over the next three months.

The NRI for wages and salaries remains strong.

April’s reading of 57 is just a notch below January’s all-time high NRI of 58.

Wage increases are likely to become less prevalent among respondents’ firms, but are expected to remain solid; the forward-looking NRI for expected wage costs decreased from 74 to a still strong 59.

Employment growth was less widespread at respondents’ firms in the first quarter of 2019, and the NRI declined to 22 from 25 in the previous quarter.

The NRI of 30 for expectations for wage costs over the next three months suggests that the first-quarter decline was transitory.

Capital spending increases remain less prevalent than in 2018, although capital spending improved since the previous survey; the NRI for capital spending is 29, up from 26 in January.

The NRI for capital spending over the next three months reflects a similar recovery, with the index at 32, up from 20 in the previous survey.

The NRI for equipment, information, and communications technology capital spending remains stronger than the indexes for all capital spending, but fell from 45 in January to 35 currently—well below its 2018 high of 49 in October.

Capital spending on structures has not been as robust; the current NRI of 8 has been almost constant for a year.

More than half of survey respondents (52%) report shortages of skilled labor at their firms.

This is an increase from the 45% who reported shortages a year ago.

In the April survey, 18% of panelists report no difficulty in hiring and 15% report no open positions.

These shares are down modestly from 22% and 19%, respectively, in the previous survey.

Respondents reporting no open positions are concentrated in the services sector, while all goods-producing and TUIC sector respondents report open positions at their firms.

For those respondents reporting difficulties in hiring, the positions that are most difficult to staff are high-skill positions—cited by 78% of respondents—followed by mid-skill positions—cited by 49% of respondents.

Raising wages remains the most commonly cited action to address difficulties in hiring, followed by training internal staff for promotion.

While most panelists report no impact—in general or on net—at their firms from recent tariffs, a majority of goods-producing sector panelists (75%) reports negative tariff impacts at their firms.

Goods-producing panelists report tariff impacts have most influenced higher costs (67%), higher selling prices (50%), and negative sales (42%).

Goods-producers also report the most common adjustment to plans for hiring and investing at theirs firms are changes in sourcing/supply chain shifts.

April survey results suggest that the pause in Fed funds policy rate increases appears to be favorable for business conditions.


What to read next

Newly imposed tariffs, retaliation could cost U.S. one million jobs
Retailers to Trump: Your tariffs will destroy us
China and United States edge closer to full-blown trade war

Out of ten sectors of Slovak economy, eight rose

 
Economic performance in the 3rd quarter was driven by the growing industry, developments in real estate market and transportation, including storage.
 
 

Latest

Don't know where to go in Paris? To see Moulin Rouge VIP show evening, of course
ADF mobilized $8.9 billion for Africa’s low-income countries, highest in its 50-year history
Three ships to bring Ukrainian foods to India, Turkey, Spain
Depot of the future delivers Australia’s largest electric vehicle logistics fleet

NEWS

3,000 security officers searched in 11 German states, far-right figures arrested for planning attacks

Argentine VP Cristina Fernandez de Kirchner sentenced to 6 years in jail for corruption
New Zealand: TAIC issues report on fire on board cargo ship Kota Bahagia
NTSB urges immediate inspections of Bell 407 helicopters
U.S.: Locally heavy rain and snow
Croatian MiG-21 crashed, both pilots survived
 

BUSINESS

Luxury travel market to grow by $703.14 billion

IATA: Airlines to return to profit next year but cargo under pressure
UAW urgently calls on automakers to move supply chain out of China's Uyghur Region
UK's fifth biggest trade union calls for an end to rip-off youth rates
Deal on new law to ensure products causing deforestation are not sold in EU
NHS plans to return retired and partially retired staff to work
 

Trending Now

EU antitrust watchdog slaps Deutsche Bank, Rabobank with bond cartel probe

Depot of the future delivers Australia’s largest electric vehicle logistics fleet

Bombardier breaks ground on Abu Dhabi service centre, will add more than 100 aerospace jobs

Taiwan Semiconductor to create 10,000 high-paying high-tech jobs in its new chip foundry in Arizona


POLITICS

Tajikistan plans to develop green economy in 4 years for $2 billion

European Union committed to mobilize 2.6 billion euros for Armenia
Thousand of Moldova's households to get higher compensations when paying bills
FM: Hungary received exemption from using oil price cap
Commission approves €26.3 million Finnish measure to support SEVO in construction of hydroelectric pump storage
Five Polish regions to get €3.85 billion for just transition toward climate neutral economy
 

Today We Recommend

UAW urgently calls on automakers to move supply chain out of China's Uyghur Region


Highlights 

Bombardier breaks ground on Abu Dhabi service centre, will add more than 100 aerospace jobs

Taiwan Semiconductor to create 10,000 high-paying high-tech jobs in its new chip foundry in Arizona

AbbVie signs $40 million collaboration deal with HotSpot Therapeutics


COMPANIES

Bombardier breaks ground on Abu Dhabi service centre, will add more than 100 aerospace jobs

Taiwan Semiconductor to create 10,000 high-paying high-tech jobs in its new chip foundry in Arizona
DAMAC Group signs contract with Mandarin Oriental to manage luxurious resort in Maldives
Kostal to build its new plant in Mexico
Rosatom to supply uranium products to Brazil
Etihad Cargo restarts China-India freighter flights to meet industrial demand
 

CAREERS

Invivyd appoints two executives

Martinrea International appoints Maureen Midgley to board
SouthGobi Resources appoints three directors
Canon Europe promotes Hiro Imamura to EVP, digital printing & solutions
BioMar appoints Andrew Campbell as CEO for AQ1
Roche appoints Brad Moore as CEO of Roche Diagnostics North America
 

ECONOMY

Canada trade surplus widens to $1.9 billion in October

Canada's international merchandise exports rose 1.5% in October
Brazil's Central Bank adjusts 2022 inflation projections by 0.01%
Australian GDP up 0.6 pct in Q3
Egypt’s net foreign reserves rise to $33.532 billion
Italy: Harmonized inflation inches down in November
 

EARNINGS

Barnes & Noble Education Q2 2023 GAAP sales decreased 1.6%

AutoZone Q1 net income decreased to $539.32 million
Genesco Q3 2023 GAAP earnings $1.66
Kirkland's Q3 sales $131.0 million
Cracker Barrel Old Country Store Q1 2023 revenue $839.5 million
Malvern Bancorp Q4 net income $2.6 million
 

OP-ED

Micromanaging is the worst enemy of efficiency and teamwork

Niger set to monetize massive gas reserves through Saharan natural gas pipeline
Putting the brakes on EV folly that choked the market
Oil discovery in Kavango Basin may mean huge benefits for Namibians
Cape Town and Dubai battle over Africa's energy future
Is America going to lose its superpower status?
 

AGRIFISH

Russia receives right to export animal feed to Myanmar

Rospotrebnadzor: Swine flu reported in 74 Russian regions
Hong Kong Customs detects suspected frozen meat smuggling case involving cargo vessel
First direct train from Laos to China arrives with 543 tons of fruit
Vets cull 15,000 ducks in Czech Republic over bird flu outbreak
Hong Kong suspends poultry meat and products import from areas in Canada
 

LEADERSHIP

Only 32% of employees believe their pay is fair

Corporate duty waivers limit organic company growth and innovation
Women buy from women, men buy from women and men
How employee opinion impacts CEO dismissal
Keeping it in family can be good news when it comes to CEOs
Over a third of office workers are hybrid 'misfits'
 

CRIME

Walmart to pay Massachusetts $500,000 as part of alleged drug pricing violations

AT&T settles SEC charge of selectively disclosing material information to Wall St. analysts
Hertz to pay $168 mln to settle over 95% of wrongful theft report claims
Glencore to pay Republic of Congo $180 mln over alleged corruption claims
Fraudsters target water infrastructure projects, OLAF closes several cases
Rhode Island man to pay more than $2.8 million in restitution for virtual currency fraud
 

Magazine

TRAVEL

Cambria Hotels opens in Minneapolis

All aboard the Heathrow Festive Express
Asuncion, Mother of Cities and Paraguay’s center of culture, music and shopping
"Pets with Love" Dog Adoption Carnival 2022 to be held in Hong Kong
Weather-resistant ArtWalk Downtown Billings, Montana
Dual branded Courtyard and Residence Inn by Marriott Hotel opens in Montreal
 

SEA, LAND, AIR

Lamborghini Huracán Sterrato, first super sports car for any terrain

New colorful Porsche 718 Style Edition models
2023 Toyota Prius Prime, solar panel roof and reliability
Volvo EX90, a car with updates
Cessna Citation CJ4 Gen2 jet, pursue your business goals while enjoying journey
GMC first Sierra EV marks turning point
 

DESIGN

Patchwork carpets, vintage Persian carpets made with unparalleled skill

Real life wallpapers, perfectly executed
A. Lange & Söhne, men's watches with true Saxonian DNA
Nella Vetrina, luxurious Italian designers bathroom vanities and furniture
Karastan rugs, durable and beautiful
Leather bags for every occasion and every life style
 

GADGETS

ASUS launches ExpertBook B9 for executives

Take Elektor Fortissimo and make your own high-end amplifier
RangeXTD, a Wi-Fi extender that actually works
Monitor II A.N.C. headphones, iconic Marshall sound
Zebra TC15, a clever mix of a mobile phone and a computer for business use
Bathroom speakers will make your relaxing even better
 

HEALTH

EU regulator backs bivalent COVID shots for primary vaccination

Strep A killed at least nine children in UK
Justice Department secures agreement with Alabama Medicaid to remove unlawful sobriety mandate for health care access
Pfizer and BioNTech apply for FDA authorization for Omicron-retooled vaccine booster in kids under 5
Cornwall first area in England to trial NHS Digital Health Check
Huge rise of scarlet fever cases in UK, 6 kids dead of Strep A
 

MEANTIME

Maybe aliens are waiting to hear a signal from us first

NASA testing new robotic arm that really knows how to chill out
Mars is more active than previously thought
James Webb telescope produces an unparalleled view of the ghostly light in galaxy clusters
China's two meteorological satellites put into operation
Lagoon dries up as drought grips Peru