U.S. firms holding off hiring, but not many layoffs: Poll

Nearly 3 in 5 companies seeing no change in employment levels — highest since January 2010
By Lucia Mutikani
|hrreporter.com|Last Updated: 10/24/2011

WASHINGTON (Reuters) — United States companies do not plan to significantly increase payrolls over the next six months but neither do they intend to aggressively fire workers, according to a recent survey.

The National Association of Business Economics' industry survey found that 59 per cent of the 68 respondents saw no change in their employment levels, up from 49 per cent in July. That was the highest percentage since January last year.

The survey was conducted between September 20 and October 5.

About 29 per cent of businesses expected to increase payrolls, down from 43 per cent in July. Three per cent planned to lay off workers, up from zero three months ago.

The findings suggest that job growth will probably remain too slow to lower a stubbornly high unemployment rate that has been stuck above nine per cent.

After adding to payrolls at a brisk pace early in the year, businesses have turned cautious as the debt crisis in Europe and acrimony in Washington over budget policy cloud the economic outlook.

While the euro zone accounts for about two per cent of U.S. exports, economists warn the fiscal troubles in the region could trigger a financial crisis that would hit American banks and drag the economy into a new recession.

The survey found that one-fifth of businesses had seen a drop in sales because of the European debt crisis, with just under one-third expecting the drag to continue through the first quarter of 2012.

Amid the economic uncertainty, businesses are cutting back on capital spending. One-third of businesses said they were increasing investment in capital, down from 41 per cent in July. About 60 per cent planned no changes to their capital spending budgets, up from 53 per cent three months ago.

Business spending in equipment and software has supported the weak economy. While businesses are cutting back on capital spending, they still do not believe the economy will slide into recession.

Most respondents expected the economy to grow slowly but not slip back into recession. About 84 per cent expected gross domestic product to grow at an annual pace of about two per cent or less.

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