Following their two worst years since the 1989-92 recession, New Jersey employers are feeling more optimistic about the outlook for their industries and their own companies, NJBIA said today in releasing the results of its 2003 Business Outlook Survey.

"This year's survey reveals hopeful evidence that the worst is behind us. After two very tough years, we are encouraged that our members are feeling more upbeat in their outlook," NJBIA President Joe Gonzalez said in a news conference at the Association's West State Street headquarters.

"Both in the outlook for their own industries and for the sales, profits and employment of their own companies, more employers expect conditions to improve than expect conditions to get worse. They have weathered the recession, and they see better days ahead."

Thirty-six percent of survey respondents said they expect conditions in their industries to improve in the first six months of 2003, versus only 23% who expect conditions to worsen and 41% who expect conditions to stay essentially the same. This represents a reversal of sentiment from the 2002 survey, when more were pessimistic than optimistic.

Among specific industries, expectations were more positive than negative in all major sectors except retail trade and construction, where they were essentially neutral.

The survey also found that 43% of companies believed their industries were in a recession in September 2002, when the survey was conducted. This was up from 39% a year earlier and represents the highest percentage "in recession" since this business-cycle question was first asked in the 1996 survey. More importantly, however, only 9% of employers said their industries were heading into recession, the lowest percentage since this question was first asked eight years ago, a strong indication that a majority of companies have already hit their recession bottom.

In other findings:

1. Following last year's precipitous decline, the outlook for sales, profits and employment has improved, although it is not quite back to pre-recession levels. The outlook for improved business activity in these core areas of business activity remains at the second lowest level of the last nine years.

2. Employers continued to identify healthcare costs and local property taxes as their two most troublesome problems, but they added a new concern to their top-three list-state taxes. They also said the two most important things Governor James E. McGreevey can do to make New Jersey more business friendly are to lower healthcare costs and cut business taxes.

3. A majority of respondents said New Jersey is worse than other states in its attitude toward business, as well as its ability to promote economic development and attract new business. Only 35% said the Garden State was a good site for business expansion, down sharply from a 12-year high of 50% two years ago.

4. A softer economy has eased labor markets, making it easier for employers to find qualified workers. Sixty-seven percent of employers reported difficulty finding skilled workers in 2002, down from a high of 80% two years earlier.

5. The softening labor market has eased other pressures that had built to critical levels during the prosperous 1990s. Only 23% said a shortage of labor had hampered business expansion plans over the past year, down from an expansion high of 48% two years ago. And only 42% said a shortage of labor had driven up labor costs in 2002, down from a high of 75% two years ago.

6. The weak economy and abundant competition have made it more difficult for employers to raise prices. Only 30% increased prices for their products in 2002. This compares with 36% last year and 42% the year before that. Sixteen percent said they lowered their prices in 2002, more than the 12% who reported lowering prices in 2001 and the 9% reporting price reductions the year before that.

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