Sales Rise as Profit Margin Pressure Eases: Q1 NABE Business Conditions Survey

Sales growth for the first quarter of the year has improved from Q4 of last year, according to the latest Business Conditions Survey from the National Association for Business Economics (NABE). Surveyed NABE members reported that the Net Rising Index (NRI) for sales (percentage of rising sales minus falling sales) jumped from a reading of 8 in Q4 of 2022 to 30 in Q1 of 2023. 

And the forward-looking NRI suggests that sales will continue to grow — the index rose from 5 to 25 in the first quarter. 

Other results of the survey included: 

• Four in 10 respondents said prices charged are increasing, but this measure is down from 46% in the previous quarter and 49% in the prior year. 
• While more members noted falling profits (29%) than rising profits (22%), this NRI for profit margins improved, rising to -8 from -25 in the last quarter of 2022. Most respondents (58%) don’t anticipate any changes to profit margins in Q2. 
• For the third quarter in a row, 63% of respondents reported rising wages. No members reported falling wages in Q1, nor are any projecting wages to drop in Q2. 
• The employment NRI fell to zero, its lowest reading since the negative readings reported in mid-2020. 
• Less than half (44%) of panelists believe there’s a 50% or higher chance of a recession within the next year.