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.
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.
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: