Fewer firms plan to add workers in this quarter, according to the Business Conditions Survey released by the National Association for Business Economics.

The share of respondents who anticipate their firms will add workers in the next quarter fell to 27% in April from 30% in the January survey. However, the share expecting job reductions fell to 9% from 14%. This results in a net rising index of 18, up one point from 17 in January’s index and consistent with readings over the last 12 months.

GDP

Respondents also maintained their more positive expectations for economic growth from the January survey; two-thirds of respondents still expect real GDP growth above 2% in 2017 and just 1% expect no growth or a decline.

“The results of the most recent NABE Business Conditions Survey reflect relatively favorable conditions for firms during the first three months of this year,” said NABE President Stuart Mackintosh, executive director, Group of Thirty. “Profit margins improved with strength in prices charged, and sales continued to increase, although at a more moderate pace than the previous quarter. At the same time, materials cost pressures appear to be stabilizing.”

Wage growth

As in the January survey, about 40% of respondents reported their firms raised wages in the past three months. The share of respondents reporting that wages and salaries had increased at their firms in the past three months declined just one percentage point from that in the January survey. However, expectations for wage increases over the next three months moderated substantially from their surge in January.

Forty-four percent of respondents expect wages to rise over the coming three months, down from 59% in the prior survey. The decline led the net rising index to drop to 43 from 56 in January. There were some large variations across sectors, with goods-producing firms still showing the strongest NRI at 73 for wage increases in the next three months and the weakest — though still positive — net rising index in the services sector, which fell to 28 from 44 in the prior survey.

Election, ACA impact

The survey also asked panelists if their firms changed any hiring or investment decisions in anticipation of potential changes in US economic policy following the results of the November 2016 election.

Results from both the pre-election October 2016 survey and those from the post-election January survey showed smaller firms had been more likely to delay hiring and investment decisions due to policy-related uncertainty. However, the current survey results show large firms are more likely than smaller ones to have made changes to hiring and investment decisions in the first three months of this year.

Still, the vast majority of all firms continues to report no change in hiring or investment; that number stands at 77% of firms with more than 100 employees in the April survey, compared with 85% of smaller firms.

Respondents were also queried on how much of an impact, either positive or negative, a major change to the Affordable Care Act would have on their firm. Panelists were relatively sanguine about the impact, although this question had a significant share of “don’t know” responses. A plurality of respondents, 49%, reported that a major change in the ACA would have a neutral impact on their firms. The sum of positive responses is greater than the sum of negative responses by a fairly large margin: 23% versus 9%.

Positive responses also outnumbered negative responses for each individual sector, although the services sector accounted for the largest portion of negative responses at 16%, including 5% reporting a significant negative impact. The finance, insurance and real estate sector has the largest share of positive responses at 32%, while the goods-producing sector accounts for the largest share of “unknown” impacts.

“On balance, the panel remains largely neutral in response to recent policy developments, including potential changes to the Affordable Care Act,” noted Survey Chair Emily Kolinski Morris, chief economist, Ford Motor Company. “But we continue to see some divergence in responses from panelists representing firms across different sectors in our panel. Although the vast majority of respondents continues to cite no change in hiring or investment decisions due to post-election developments, those from goods-producing firms were the most likely to cite policy-related changes in US hiring and investment activity.”

NABE is a professional association for business economists and others who use economics in the workplace. The survey included 97 NABE members and was conducted between March 21 and April 6, 2017.