Business executives have grown more pessimistic about their ability to achieve higher profits amid moderate economic growth, according to a survey of third-quarter expectations released Monday.
Although they expect sales to remain strong, many of the 3,000 executives surveyed by financial information provider Dun & Bradstreet Corp. said their profits will be pressured significantly by inflation."Many businesses believe the economy will continue its expansion through September, but not without driving prices for equipment and commodities higher," said Joseph W. Duncan, Dun & Bradstreet's chief economist.
Dun & Bradstreet said its profit expectations index fell for the July-September period compared with the prior quarter, meaning fewer executives predicted profits would grow. D&B's sales index improved slightly.
Overall, 59 percent of the 3,000 executives surveyed in May said profits would expand in the quarter, while 66 percent expected a sales gain. However, many expected profit margins to be narrower than the previous quarter.
Moreover, few businesses expect the economy to depart from its first-half pace of slow, steady growth, Duncan noted.
On the inflation front, Dun & Bradstreet saw an increase in its prices index with 42 percent of the executives expecting to raise prices during the period.