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New ChangeWave Survey Shows a Pullback in U.S. Economic Recovery

Semiconductor sector takes a hit


ChangeWave’s latest corporate quarterly survey shows a sharp pullback in the U.S. economic recovery — led by a downturn in third-quarter sales projections and weakness across a range of key indicators.

The September survey of 2,801 corporate respondents is pointing to a tougher second half of the year for the U.S. economy, with the semiconductor sector looking particularly hard hit going forward.

Sharp Pullback for the U.S. Economy

Only one-in-five respondents (21%) now say that their company sales will come in Above Plan for 3rd Quarter 2010 — 6-pts lower than the previous quarter. Another 35% say their company sales will come in Below Plan — 7-pts worse than previously.

Overall Corporate Quarterly Survey Results

The current downturn is a reversal of the upward trend of our previous five quarterly surveys. But as we saw after the 2001 recession, coming out of a business downturn can be quite a bumpy ride. So while the current results are clearly discouraging, it should be remembered that they follow five consecutive quarters of improvement.

Additional survey findings include:

Job Market: After steadily improving over the previous 15 months, the labor market is once again tightening. Only 19% report there are More new hires in their company at this point in the 3rd Quarter vs. last quarter — 5-pts less than previously.

Sales Pipeline Projections: The weaker outlook is most apparent in the sales pipeline projections for 4th Quarter — with just 20% of respondents saying their company sales will come in Above Plan, 7-pts less than the previous quarter. Simply put, the fourth-quarter sales projections are now essentially the same as a year ago (September 2009).

But There’s One Silver Lining

For the past three years we have been measuring the impact of the credit crisis on U.S. businesses — generally considered to be a key cause of the 2008 recession. And in one of the few positive developments of the survey, we continue to see steady improvement on this issue.

A total of 17% say that it is harder for their company to borrow money than it was 90 days ago — but that’s a 3-pt improvement from the previous survey. And while just 5% say it’s easier to borrow money, that’s 2-pts improved from previously. Similar to last quarter, the improvement is occurring across companies of all sizes.

Ability of Companies to Borrow Money

Individual Sector Results

At the sector level, the survey shows Semiconductors taking a major hit after five consecutive quarters of momentum — including big downturns in third-quarter sales growth, product inventories and pricing power.

As an example, here’s a look at current quarter sales for the Semi industry over the past four years:

Semiconductor Sector Survey Results Quarterly Sales

The complete ChangeWave report is available here.

Article printed from InvestorPlace Media,

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