New Jersey companies expect 2005 to be the best year for sales, profits, purchases and employment since the onset of the recession four years ago, the New Jersey Business & Industry Association said today in releasing the findings of its 2005 Business Outlook Survey.

Fifty-six percent of companies responding to the NJBIA survey expect their sales to rise next year, 49 percent expect their profits to rise, and 46 percent expect to increase their purchases. Employment expectations are also on the rise, with 27% expecting to hire more workers. These are the highest levels of confidence for these indicators since the 2001 recession.

Rising sales and profits over the past year apparently did much to strengthen the confidence of the business community. In 2004, business activity actually matched expectations, a welcome change after three lean years in which overall business activity consistently fell short of expectations.

"A stronger economy in 2004 did a lot to restore the confidence of New Jersey employers," said NJBIA President Philip Kirschner. "If the economy performs as expected, 2005 should be an even better year. After sputtering and misfiring for three years, the economy is picking up steam, and the outlook is encouraging."

The 2005 Business Outlook Survey questionnaire was distributed to NJBIA's 22,500 NJBIA member companies in September 2004. The survey findings are based on the first 1,900 responses. Respondents came from every industry and every region of the state. Nearly three out of four respondents were small companies with 1-24 employees.

Especially noteworthy are employers' hiring plans. Twenty-seven percent expect to hire more workers in 2005, but only 7% anticipate layoffs. The remaining 66% of companies believe employment will remain stable. Employment expectations are positive across the board for companies in every major industry, including manufacturing.

Although they are more positive in their economic outlook, New Jersey employers remain unhappy with the state's business climate and with New Jersey as a place for business expansion. Following are more survey findings:

General Economic Outlook-In their outlook for the national economy and for their own industries, respondents remained upbeat. Expectations for the New Jersey economy remained more subdued. In assessing the outlook for their own industries, 41% expect to see gains in the first half of the year, and a virtually identical proportion expect conditions to stay about the same. Only 19% expect conditions to worsen. These results are virtually unchanged from the year before.

Economic Cycle-Looking at where companies find themselves in the economic cycle, seven in ten respondents said their industries were on the upswing as of September 2004, with 32% describing their industries as "expanding" and 38% describing their industries as "moving from recession to recovery." This is the most expansionary assessment of the last six years.

Employment-In 2004, hiring activities at individual companies more closely matched expectations than at any time in the last four years. Twenty-four percent of this year's respondents reported adding workers to their payrolls in 2004, while 17% trimmed their payrolls. This was almost an exact reversal of what happened in 2003, when 24% reported cutbacks and only 15% reported increases. In 2005, 27 % expect to hire more workers and only 7% anticipate cutbacks.

Business Spending-Survey respondents anticipate spending more on goods and services. A larger proportion of companies plan to spend more on advertising, capital investments and purchases in 2005 than they did the year before.

NJ's Business Climate-In spite of an improving economy, survey respondents continue to give New Jersey low marks as a place for business expansion. New Jersey's favorable ratings have fallen or stagnated for four consecutive years. Only 28 percent said New Jersey is a good place for business expansion, the same as the year before, but down from 50% in 2001.

New Jersey vs. Other States-When asked to compare New Jersey to other states in key areas of government performance, significant majorities said New Jersey is worse than other states when it comes to taxes and fees, government spending, its attitude toward business, and controlling the cost of healthcare and regulatory compliance. In contrast, survey respondents continued to assign high marks to New Jersey for its quality of life as well as for the quality of its schools and its workforce.

Worst Problems-When asked to rank their problems, survey respondents identified the cost of health insurance as their worst problem for a 16th consecutive year. The second worst problem identified in the 2005 survey was property taxes, followed by the overall cost of doing business in New Jersey.

See Outlook Summary Table.