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Sales improved during Q1 of the new year, according to data from the April 2023 Business Conditions Survey from National Association for Business Economics (NABE). That said, profit margins continue to be under pressure. 

The Net Rising Index (NRI) for sales during Q1 was significantly higher (30) than the previous survey’s reading (8). The NRI is the percentage of panelists who report rising sales minus the percentage reporting falling sales. And sales are expected to rise over the next quarter, as the forward-looking NRI rose to 25 from 5 in January’s survey.

Profit margins registered an NRI of -8 for Q1 2023, as more panelists reported falling profits (29%) compared to rising profits (22%). However, this is an improvement from the NRI of -25 in Q4 2022. The majority of respondents (58%) do not expect a change in profit margins over the next three months.

The NRI for employment was recorded as zero for Q1 2023. This is the lowest reading since the July and October 2020 surveys, during which the NRIs were negative. In the past, negative employment NRIs have been associated with an economic downturn.

NABE panelists are almost evenly split on the likelihood that the U.S. economy will enter a recession within the next year. Just under half (44%) indicate a more than 50% likelihood of a recession, while just over half (53%) indicate a less than 50% likelihood.