U.S. businesses expect sales to keep growing briskly over the next year, even as payrolls rise much more slowly, according to new data from the Atlanta Fed.
The Atlanta Fed’s Survey of Business Uncertainty showed firms expected sales revenue to rise 5.1 percent over the next 12 months in May, based on the survey’s smoothed index. That was down slightly from April’s 5.3 percent but remained historically strong.
The smoothed indexes are designed to filter out month-to-month survey noise, while the unsmoothed figures show the raw monthly readings.
Expected employment growth was much lower. Firms said they expected employment to rise 1.5 percent over the next year, down from 1.7 percent in April and 2.3 percent in February.
That gap is the central message of the survey. In May, expected sales growth exceeded expected employment growth by 3.6 percentage points, one of the larger gaps in the survey’s history. The gap was 3.1 points a year earlier and 2.8 points two years earlier.
The widening gap does not necessarily point to weak demand for workers. Labor-force growth has slowed sharply, lowering the pace of payroll gains needed to keep the labor market steady. Dallas Fed economists estimated earlier this year that break-even employment growth—the number of new jobs needed each month to hold the unemployment rate constant—had fallen from around 250,000 a month in 2023 to near zero by late 2025.
That makes the survey’s employment numbers look stronger than they might appear in isolation. Firms are still planning to add workers, but they expect revenue to grow much faster than headcount.
The more striking finding is that businesses do not appear to expect limited hiring to hold back sales. The survey suggests companies believe they can continue expanding revenue even without a comparable increase in payrolls. This implies an increase in labor productivity.
Business uncertainty about future sales also eased in May, falling close to its lowest level since before the Iran war began. The smoothed sales-uncertainty index declined to 3.6 percent from 3.7 percent in April.
The unsmoothed data showed an even sharper sales-employment gap. Expected sales growth rose to 5.3 percent in May from 4.7 percent in April, while expected employment growth slipped to 1.3 percent from 1.5 percent. That pushed the sales-employment gap to nearly 4 percentage points, up from 3.2 points in April.
Actual reported growth also remained solid. Firms said sales revenue had risen 4.8 percent over the prior year in May, up from 3.9 percent in April. Reported employment growth was 2.5 percent, down from April’s 3.5 percent but still positive.
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