More than half of corporate employees in the US say their company’s sales will be less than expected in Q4 2008, pointing to evidence that the current recession is deeper and more painful than the 2001 recession, according to the latest findings from ChangeWave Research.
The latest corporate quarterly survey found alarmingly low fourth-quarter 2008 sales projections among businesses, a deteriorating job market, an unprecedented pullback in capital spending and abysmal visibility going into 2009.
Sales Projections Lower-than-Expected
Some (51%) of respondents project that their company sales will come in below plan for Q4 2008, 16 points worse than the previous quarter. Only 11% say their company sales will come in above plan -a seven point decrease from previously.
These corporate sales projections are the worst ever recorded since 2001 in such a survey, Changewave said.
Labor Market Stagnation
In terms of the labor market, Changewave finds an unprecedented stagnation. Nearly one-third (31%) of respondents say there are less new hires in their company at this point in Q4 vs. last quarter,? a nine-point increase since the previous survey. Only eight percent say there are more new hires.
Credit Crisis Tightens Chokehold
Despite the federal government’s numerous attempts to open the credit spigot, the latest data shows the US credit crunch is continuing to worsen its effect on businesses.
Three-in-ten respondents (30%) now say that it is harder for their company to borrow money than it was just 90 days ago, a five-point increase from the previous survey. Less than 1% say it is easier to borrow money.
Adding to these grim findings, the survey shows a huge plunge in visibility going forward. Sales pipeline projections for Q1 2009 – which are the worst ever recorded in a ChangeWave survey – show 39% of respondents reporting they’ll come in below plan, 18 points worse than the previous survey. Just 9% say their company will come in above plan, 12 points less than before.
In perhaps the most ominous sign of rapidly deteriorating US business conditions, respondents also project the largest cutbacks in capital spending in a ChangeWave survey since the question was first asked in December 2002.
Nearly half of respondents (45%) estimate a decrease in their company’s 2009 Q3 capital budget compared with the current quarter. Only 6% project an increase.
Capital spending is plunging at a time of year when companies normally experience seasonal increases, ChangeWave said.
Since 2003, December had been the peak point of the yearly cycle in this survey until December 2007. At that time, ChangeWave noted a critical early warning that cap spending was seriously breaking down. Continued deterioration for the next four quarters has led to this December’s historic collapse, the company said.
About the survey: The latest wave of the ChangeWave corporate quarterly survey was completed December 1, among a sample of 3,029 US respondents.