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Survey: US companies say rising sales cause increase in employment, wages during 2nd quarter

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DETROIT - Rising sales helped boost hiring and wages at U.S. businesses in the second quarter, and companies are optimistic that the trends will continue this fall, according to a new survey by the National Association for Business Economics.

Fifty-seven per cent of the 85 respondents to the quarterly survey said sales at their companies rose in the April-June period. That was up from 53 per cent in the first quarter and 35 per cent in the same period a year ago. Just 5 per cent of firms said sales fell during the second quarter.

Respondents also said the outlook for the July-October period is strong. Fifty-nine per cent of respondents said they expect sales to increase during the third quarter, and just 1 per cent expects sales to decline. Respondents from the finance, insurance and real estate sector were most optimistic about sales increases, while the service sector lagged.

As sales picked up, so did hiring. Thirty-six per cent of firms said they hired more workers during the second quarter, up from 28 per cent in the first quarter and 29 per cent in the second quarter of 2013.

The employment outlook was steady, with 37 per cent of respondents expecting their companies to hire more workers in the July-October period. Finance, insurance and real estate companies were most likely to say they expect employment increases, at 48 per cent; service companies were the least likely, at 28 per cent. Less than 10 per cent of respondents expect employment declines in the third quarter.

For the first time since October 2012, no respondents reported falling wages. Forty-three per cent said their firms raised wages during the second quarter, which was than double the share that reported raising wages during the same time period a year ago. More than one-third of respondents — 35 per cent — expected wages to continue to increase in the third quarter.

Hiring and wage increases hit companies' profits. Just 27 per cent of respondents said their firms' profit margins rose in the second quarter, down from 32 per cent in the first quarter. Despite the slowdown, manufacturers and financial companies both said they expect margins to grow at a faster pace in the third quarter.

Some companies improved their margins by raising prices. Twenty-five per cent of respondents said their businesses raised prices in the second quarter, up from 20 per cent in the two previous quarters. Eight per cent said prices fell, up from 3 per cent in the first quarter.

Technology and communications companies and manufacturers said prices were up during the quarter, while service companies and finance companies said prices were softer. Nearly three-quarters of respondents expect no change in the prices their firms will charge in the third quarter.

The quarterly survey by NABE is intended to gauge business conditions at members' firms or industries. Almost half the respondents are from companies with more than 1,000 employees.

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