Profit margins have fallen in the last three months at companies employing nearly 60 percent of the members of the National Association of Business Economists, the association said in a survey released yesterday.
Because of the recession, only 17 percent of the 400 large companies employing the economists were able to increase the prices they charge, while 53 percent still were increasing wages and salaries. The result is a severe squeeze on profit margins, according to the survey.
But wage increases are slowing down. At 7 percent of the companies, wages actually fell, but at 58 percent wages were rising more slowly than they were in the previous three-month period. In the few cases where wages were declining, the economists said they were falling faster than they previously had been.
Manufacturing companies have been the hardest hit by the recession. Nearly three-fourths of that category had falling profit margins, with 62 percent of the three-fourths reporting declining sales. About 40 percent of the entire group had falling sales.
One-fifth of the companies' economists reported prices charged fell in the last three months. Of the 17 percent who said prices were rising, only about one-10th said they were going up faster than they had been. One-fourth of the 17 percent said their companies' prices were rising more slowly.
Generally, the group expects no rapid improvement in their companies' fortunes. The economists believe a recovery will begin in the third quarter of this year, with real output rising at less than a 3 percent annual rate in the second half of the year and at a 3.3 percent rate in 1983.
Consumer prices will increase at a 5 to 6 percent rate later this year and throughout 1983, the economists said. Unemployment will still be about 9 percent in the fourth quarter of this year, but will drop to 7.9 percent by the end of 1983, according to the survey.
Interest rates are expected to fall slowly over the next year and a half, with commercial banks' prime lending rate, now 16 1/2 percent, dropping about 2 percentage points by late this year and to less than 13 percent by late 1983.
With interest rates remaining that high, housing starts--which were running at less than a 900,000 annual rate in April--are forecast to climb only to a 1.1 million unit rate by the fourth quarter and to a 1.4 million rate in the 1983 fourth quarter.