- 55% of small and mid-sized business owners surveyed are
optimistic about the national economy.
- 79% are highly optimistic about the prospects of their own
business.
- Inflation pressures are easing with fewer than half expecting
to raise prices in the next six months.
PITTSBURGH, Feb. 28,
2024 /PRNewswire/ -- PNC's latest semi-annual survey
of small and mid-sized businesses, which concluded Feb. 1, shows that business owner optimism about
economic conditions over the next six months has reached a 22-year
high amid lessening fears of a recession.
A majority of those surveyed (55%) are highly optimistic about
the national economy, rocketing from 34% last fall and 26% a year
ago. Four in 10 (40%) are highly optimistic about the global
economy, up from 25% last fall and 9% a year ago. Nearly
two-thirds of business owners (63%) are highly optimistic about
their local economy, up from 47% last fall and 30% a year ago.
Optimism also runs high about their own businesses. Eight in 10
business owners (79%) report that they are highly optimistic about
the prospects for their own business, consistent with last fall
(77%) and up substantially from a year ago (60%). Construction
leads other sectors, with 85% anticipating better times ahead for
their own businesses. Larger revenue ($20
million to $250 million)
business leaders express the most optimism about the national and
local economies as well as their own businesses, while smaller
revenue ($100,000 to less than
$3 million) business owners are the
least optimistic.
"Business leaders see their own businesses continuing to do well
in a strong and improving economy, whereas previously they had been
telling us they are doing well despite concerns about the overall
economy," said Gus Faucher, PNC
chief economist. "However, risks remain. PNC expects near-term
economic growth and we will be looking closely at employment data,
inflation and when and how the Federal Reserve makes decisions
around interest rates."
Based on the survey results, inflation pressures appear to be
lessening. Fewer than half (47%) of businesses expect to increase
prices in the next six months, down from last fall (55%). Of those
expecting to take that step, just over one in 10 (12%) plan to
raise them by 5% or more, a drop from last fall (25%) and a year
ago (23%); four in 10 (41%) expect a smaller increase of 1-2%, up
from last fall (19%) and last spring (32%).
At the same time, four in 10 (40%) businesses say they expect
the prices their suppliers charge to increase in the next six
months, down from six months ago (49%) and last spring (47%). Four
in 10 (41%) of those expecting increases in supplier prices only
expect a modest 1-2% rise, while fewer (13%) expect an increase of
5% or more.
"Supply chain issues, which were a major contributor to the
inflation spike late in 2021, and into last year, have largely
dissipated," Faucher said. "Yet employers remain under pressure due
to increasing costs for hiring and compensation. As the
exceptionally tight labor market loosens somewhat this year, we may
see those pressures lessening."
Related to employment, two in 10 (21%) business owners expect to
increase their full-time workforce in the next six months, up from
9% last fall and 13% a year ago. Three-quarters (74%) expect the
number of full-time employees to remain the same, while only a
small number (4%) anticipate reductions. Among businesses looking
to hire employees, a quarter (25%) say it's become harder to hire
qualified employees, down from last fall (35%) and a year ago
(36%).
The hiring challenges employers are facing have changed little
since last fall. They say the top problem is a lack of applicants
overall (28%, 32% in fall 2023), followed by candidates' lack of
experience or skills (22%, unchanged from fall 2023), and high
salary/benefit or flexibility requirements (9%, 8% in fall 2023).
One shift since the fall is in candidates' inability to meet
legal/security requirements, which rose to 9%, from 5% six months
ago.
Other findings in the survey include:
- Fraud and Cyber Concerns: Two-thirds (66%)
of business owners are moderately or extremely concerned about
either the risk of fraud (59%) or potential cyber
security breaches (58%).
- Profit Expectations: The outlook on profits for the next
six months remains steady, with just over half of those surveyed
(52%) expecting an increase, midway between the levels recorded
last fall (55%) and a year ago (49%). Few businesses anticipate
decreases in profits (5%) or sales (5%) over the same time
period.
- Need for Financing: Nearly two in 10 (18%) owners expect
their business' need for financing will increase in the next six
months, up from 7% last fall and 9% a year ago. Among businesses
expecting their need for financing to increase, fewer than three in
10 (28%) say they will definitely or probably request a new loan or
line of credit during that period. This suggests that a significant
majority are likely to tap sources other than new loans/lines of
credit to meet their upcoming financing needs.
Full national and regional survey results are available
at pnc.mediaroom.com.
The PNC Financial Services Group, Inc. (NYSE: PNC). PNC is one
of the largest diversified financial services institutions in
the United States, organized
around its customers and communities for strong relationships and
local delivery of retail and business banking including a full
range of lending products; specialized services for corporations
and government entities, including corporate banking, real estate
finance and asset-based lending; wealth management and asset
management. For information about PNC, visit www.pnc.com.
Methodology
The PNC Economic Outlook survey was
conducted by telephone from 1/2/2024 to
2/1/2024, among small and mid-sized business owners/leaders
with self-reported revenue of $100,000 to $250
million. 500 interviews were conducted nationally. Sampling
error for the nationwide results is +/- 4.4% at the 95% confidence
level. The survey was conducted by Artemis Strategy Group
(www.ArtemisSG.com), a communications strategy research firm
specializing in brand positioning and policy issues. The firm,
headquartered in Washington D.C.,
provides communications research and consulting to a range of
public and private sector clients.
DISCLAIMER: This report was prepared for general information
purposes only and is not intended as specific advice or
recommendations. Any reliance upon this information is solely and
exclusively at your own risk. NOTE: The sum of percentages may not
add to the total due to rounding.
CONTACT:
Alan
Aldinger
(412) 768-3711
alan.aldinger@pnc.com
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SOURCE The PNC Financial Services Group, Inc.