Surveys Gauge High Optimism for 4th Quarter

NEW YORK —  American executives are bullish about the rest of 1999, and Wednesday’s government report on demand for durable goods appeared to justify the enthusiasm.

A Dun & Bradstreet survey of about 3,000 executives found an upbeat sentiment for the fourth quarter, including the first gain in the outlook for exports since the Asian financial crisis arose in mid-1997.

The survey, conducted in August and released Wednesday, showed especially strong results in its indexes measuring sentiment about exports, sales, profits and employment.

The survey’s release coincided with that of a Commerce Department report showing strong August demand for new cars and aircraft, driving durable-goods orders higher for a fourth consecutive month. Analysts said that report confirms a reinvigorated manufacturing sector, but they predicted that it would not affect the outcome of next week’s scheduled meeting on interest rates by Federal Reserve policymakers.

The value of total new orders unexpectedly rose 0.9% to a seasonally adjusted $206.9 billion. Wall Street economists had forecast a 0.9% decline. The August gain built on a 4% surge in July orders, which was the strongest monthly advance in more than 1 1/2 years. The 4% is an upward revision of the department’s previous estimate of 3.6%.

The Dun & Bradstreet survey said a boost in hiring plans might further tighten labor markets at a time when the unemployment rate is at a 29-year low of 4.2%--low enough to pose a threat of significant wage increases.

But executives surveyed said they did not expect wage pressures to significantly increase inflation. Two-thirds of those responding said they expected prices in the fourth quarter either to be the same or lower than they were a year ago.

The survey reported 66% of the executives expect sales to rise in the fourth quarter, 58% expect higher profits and 38% plan to hire additional workers.

The export index surged 19 points from its all-time low of 12 in the last quarterly survey in June, rising to 31. That also represents a gain of 6 points from a year ago.

Other indexes measuring sentiment also were up substantially from the previous quarter.

“Our survey indicates that during [1999’s] last quarter, U.S. businesses expect to turn in very strong results,” said David T. Kresge, chief economist for Dun & Bradstreet. “For the first time in nearly two years, they see foreign demand for U.S. goods picking up significantly, adding to the continued strength” in U.S. spending.

Few executives fear year 2000-related computer problems, Kresge said.

“Only 10% to 15% of respondents expect Y2K to have any impact at all on sales, investments or inventories in the fourth quarter. And among those who think that Y2K will have any effect, the great majority expect it to have a positive” influence, he said.

The survey, which was conducted by phone, has a margin of error of less than 2 percentage points.

August’s rise in durable goods orders was heavily concentrated in the transportation sector, in which orders gained 4.6% to $49.4 billion. Transportation products account for nearly one-quarter of all durable goods manufactured.

New orders for industrial machinery and equipment softened 2% in August to $39.5 billion.