4 of 10 Firms Expect to Raise Prices, Poll Finds

More than 4 U.S. businesses out of 10 expect to raise prices in the first three months of 2000, as an expanding economy puts a strain on capacity, a private survey reports.

Dun & Bradstreet Corp. said Wednesday that 43% of the executives who responded to its survey said they are likely to increase prices in the quarter. That’s up from 33% who said they expected to raise prices in the 1999 fourth quarter. A corresponding index of expectations for price increases rose to a five-year high.

“The economy appears to be approaching a situation where further increases in production may push up prices more than we have observed in the past year,” said David Kresge, chief economist at the credit and marketing information company in Murray Hill, N.J.

The survey of 3,000 executives in retailing, wholesaling, manufacturing and services was taken Nov. 17 to Dec. 6. It also found that companies are more confident about profits and sales. Most of the results are reported in index form rather than as percentages.

The profits index rose to 54 for the first quarter of 2000 from 49 for the last quarter of 1999, and the sales index rose to 62 from 59. The index of expectations for price increases rose to 37 from 27. The prices index numbers are the highest since 38 for the final quarter of 1995, and the profits and sales indexes are at their highest since the third quarter of 1998.

Continuing competition for workers is one reason prices could rise. The employment index--a gauge of hiring plans--rose for a second straight quarter to 35, up from 31 for the fourth quarter and the highest since the second quarter of 1998.

“Employers are going to have to increase wages to attract new workers,” Kresge said. “While good news for the work force, this is bound to ultimately put even more pressure on prices if it can not be fully compensated by productivity increases.”

Companies overall reported a rosier outlook for exports, with the export index rising 9 points to 40, after jumping 19 points for the fourth quarter.