US corporates upbeat about economy despite shutdown: Survey

Even as uncertainty continues in Washington with rising oil prices and interest rates, companies continue to be upbeat about prospects for economic growth in the next year, a quarterly survey of business economists showed.

However, optimism for hiring, amongst economists surveyed by the National Association for Business Economics hiring, according to the survey was low.

Only 27 per cent reported rising employment at their firms from July through September, retreating from the 29 per cent in the second quarter.

Further, 37 per cent expected their companies to expand payrolls in the next six months, as against 39 per cent in the second quarter.

The slower growth came even with sales and profit margins rising in the third quarter, according to the survey.

However, optimism over future economic growth remained strong last quarter, with around 70 per cent of the economists in the survey predicting gross domestic product growth of 2-to-3 per cent, with another 19 per cent expecting growth of 1-to-2 percent.

The figures were nearly identical to those from the second-quarter survey, released in July.

Growth in the US economy stood at 2.5 per cent annual rate from April through June, an improvement as against, the first three months of the year.

However, many economists worried that the growth rate might be slowing.

Meanwhile, the shutdown which started on 1 October, was estimated to slice off around 0.3 percentage point from annualised fourth-quarter gross domestic product.

The government was expected to resume full functions following the US Congress approving an 11th-hour deal to fund the government on a temporary basis and up the borrowing authority of the company until 7 February.

Growth for the first quarter of 2014 stood at 2.6 per cent, unchanged since last month's survey.

According to some economists, however, the forecast was optimistic given that the fiscal policy tension in Washington remained unresolved.

According to commentators, concerns about the near-term outlook of the economy suggested the Federal Reserve would not start scaling back its massive monetary stimulus anytime soon.

In a surprise move, the US central bank decided last month to continue its monthly $85-billion bond purchases, and the consensus was then for a move in December.

Now, most economists expect the Fed to scale back its stimulus in the first quarter of next year, with some saying it would wait until the second quarter.