U.S. industries cite higher demand in Q3: survey

WASHINGTON (Reuters) - More U.S. industries are experiencing an increase in demand and profits, a survey showed on Monday, further proof the economy started growing again in the third quarter after a prolonged recession.

In its latest industry survey, the National Association for Business Economics said the improved optimism had pushed its net rising index (NRI) for demand to 23 in the July-September quarter, the first time it had risen in five quarters.

The index, which represents the percentage of respondents reporting rising demand minus the percentage reporting a fall, was at -5 in its last survey in July. The latest survey was conducted between October 1-12 and 78 NABE members participated.

"The survey provides new evidence that the U.S. recovery is under way," said William Strauss, a senior economist at the Federal Reserve Bank of Chicago and chairman of the NABE's industry survey committee.

The U.S. economy slipped into recession at the end of 2007 in the worst downturn since the Great Depression of the 1930s.

About 44 percent of respondents said demand had increased over the past three months while 21 percent reported a decline. The remaining 35 percent saw no change. In the July survey, only 26 percent of respondents reported an increase in demand.

The services sector reported the strongest demand, with the goods producing, finance, insurance and real estate sectors showing gains as well. Demand conditions in the transportation, utilities, information and communications industries continued to fall, however, the survey showed.

The improvement in demand contributed to an expansion in profit margins for 36 percent of the respondents, while 28 percent reported declines. That pushed the profit NRI into positive territory for the first time in seven quarters.

In the previous survey 19 percent of respondents said profits were up. With the improvement in demand and profits, 24 percent of respondents said they expected to increase payrolls, while only 4 percent indicated they were planning layoffs.

About 57 percent of respondents saw no change in their head count, while 16 percent saw job cuts through attrition. Previously, 18 percent of respondents anticipated hiring new workers and 11 percent expected layoffs.

The employment expectations NRI rose to 4 in the October survey, the highest since the start of the recession, from -10 in the previous survey, a further sign that the labor market is gradually moving toward stabilization as the pace of layoffs moderates significantly from early this year.

(Reporting by Lucia Mutikani; Editing by James Dalgleish)