Insurers In Poll Say Demand Increased

Second-quarter demand for goods and services has surged at insurance, finance, and real estate firms, according to a survey released today by the National Association for Business Economics in Washington.

The findings were based on a quarterly survey of 109 NABE members in four broad sectors. Forty percent of the respondents in the sector, including insurance, said demand is rising, 53 percent said it was unchanged and 7 percent said it was falling.

Other figures from the category with insurance:

oThirty-seven percent said profits were rising, 50 percent said they were unchanged and 13 percent saw them falling.

o Only 10 percent said they were raising prices, 81 percent said they were unchanged and 10 percent said they were lowering prices.

o Thirty-seven percent said their capital spending is rising, 52 percent said it was unchanged and 11 percent reported a decrease.

In addition to the area including insurance, NABE said stronger growth could be attributed to increased demand in the sector including transportation, utilities, information and communication (TUIC) firms.

Demand growth at goods-producing firms was essentially unchanged while the services sector, which was performing the strongest in the previous survey, saw demand growth moderate slightly, according to NABE.

The report released today included a comment from Ken Simonson, chief economist, Associated General Contractors of America.

Mr. Simonson said the July NABE Industry Survey “showed a pickup in business activity, profit margins, hiring and capital spending compared to the first quarter.”

He noted that, “Expectations also brightened for the next few quarters for the economy as a whole and for employment and capital spending, especially on structures.”

Mr. Simonson remarked that, “Fewer firms raised prices last quarter, but more firms experienced higher materials and labor costs. Nearly all respondents reported productivity gains, which may have helped their firms add to profit margins despite the cost squeeze.”

He also commented that, “Skilled-labor shortages became more prevalent. Only a quarter of respondents expect to raise prices in the third quarter, while 60 percent expect to pay more for non-labor inputs. About half of respondents expect a mild additional slowdown in housing, but 36 percent foresee a substantial slowdown.”