Rising Inflation on the Way :
U.S. Business Group Sees Rising Prices
WASHINGTON (Reuters) - U.S. businesses saw higher materials and wages costs in the third quarter and many plan to raise their prices before the end of the year, a business group said Tuesday.
The National Association of Business Economics also reported continued strong demand growth in its third-quarter survey, while exports also gained strength.
''The best news on the inflation front is ... behind us,'' said NABE President Diane Swonk. ''Exports are beginning to come back and pricing power is improving. Material costs and wages are also rising, and profit margins appear to be narrowing.''
NABE polled 103 of its members, professional economists working for companies throughout the country, on business conditions at their firm or industry. It carried out the survey in September.
It said 28 percent of firms expected to raise prices by more than 2 percent this year. A further 21 percent expected to raise prices by less than 2 percent.
In the third quarter, materials costs rose at 36 percent of firms surveyed, up from 32 percent in the second quarter, while costs stayed the same at 49 percent of firms.
Labor costs rose at 32 percent of businesses surveyed in the quarter, while only 2 percent reported lower wages, the survey said.
Fifty-six percent reported rising demand, up from 53 percent in the second quarter, while 28 percent said it was unchanged and 16 percent said it was falling.
While the majority of NABE respondents' firms do not export, those that do reported the strongest quarterly performance in two years. Forty-six percent reported rising exports, 39 percent said exports were unchanged and 15 percent said they were falling.
The survey also said that no firms expected to boost inventories significantly before the end of the year, despite earlier expectations that firms would build inventories to avoid possible disruption from the millennium computer bug. Only 36 percent said they would boost inventories at all, with the remainder expecting them to stay the same or decline.
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