Almost four times as many businesses plan to charge their customers more next quarter than expect to reduce prices, according to the National Association for Business Economics. A net 9 per cent of employers said they would increase payrolls over the next six months, the fewest in five years.
The report reinforces concern that rising expenses will contribute to a further pickup in inflation and a weakening in the labour market. A net 71 per cent of firms said costs rose last quarter, up from 65 per cent in the previous three months and the most since records began in 1994, the poll showed.
"The rising costs of materials and other non-labour inputs are a big concern and a big drag on profitability," Ken Simonson, chief economist for the Associated General Contractors of America in Alexandria, Virginia, and board member of the business group, said in an interview.
The number of respondents saying profit margins declined last quarter exceeded those registering gains by 13 per cent, the biggest differential since the 2001 recession.
Soaring expenses for raw materials forced businesses to pass on higher costs to consumers last quarter, the survey showed. A net 28 per cent, the highest since the first quarter of 2007, said they increased prices from April through June.
The survey showed fewer firms were pessimistic about their outlook for 2008 compared with the first quarter.
Fannie, Freddie: The poll was taken between June 19 and July 10, raising the possibility that most respondents hadn't had a chance to take into account the latest turmoil in financial markets following concerns about the viability of Fannie Mae and Freddie Mac.
The report included responses from 101 members of the business economists group. On July 13, Treasury Secretary Henry Paulson sought blanket authority from Congress to buy equity stakes in, and lend to, Fannie Mae and Freddie Mac, aiming to stem the collapse of confidence in the largest US mortgage financing.
