PITTSBURGH, Oct. 7, 2011 /PRNewswire/ -- With weak sales as a
major challenge, four out of five U.S. small business owners will
maintain or reduce their number of full-time employees over the
next six months, and they see little value in proposed Federal
incentives to create jobs, according to the PNC Economic Outlook
survey's newest findings.
(Photo: http://photos.prnewswire.com/prnh/20111007/NE82293 )
Only 14 percent of businesses say proposed tax incentives will
positively impact their hiring plans, PNC found, as owners'
expectations for sales and profits are significantly lower than
last spring, ushering in renewed pessimism compared to six months
ago.
"As business confidence plunges to a near-record low, the
concern is we will scare ourselves into a double-dip recession,
thus turning it into a self-fulfilling prophecy," said Stuart Hoffman, chief economist at The PNC
Financial Services Group, Inc. (NYSE: PNC). "These findings support
our forecast that the economic recovery will persist, but the slow
pace of growth will be insufficient to make any progress in
lowering the nation's painfully high unemployment rate in the
coming year."
Other Findings: Debt, Downgrade, Demand
The survey, which gauges the mood and sentiment of small and
medium sized business owners, also found that more than half (56
percent) expect the recent debt ceiling deal to have a negative
impact on the U.S. economy. Moreover, close to three-quarters (72
percent) expect the S&P downgrade of the U.S. Treasury to
impact the economy negatively and nearly half (46 percent) expect
it to adversely impact their own businesses. Other findings
include:
- Capital Spending Steady: 61 percent plan capital
spending, little changed from the spring survey (59 percent).
Technology equipment leads the list of investment priorities.
- Little Interest in New Loans: Despite keeping spending
plans on track, eight out of 10 (82 percent) say they will probably
or definitely not take out a new loan or line of credit in the next
six months. This represents the lowest demand for credit in the
history of the survey.
- Pricing Pressures Build: Just over one-third (35
percent) plan to raise prices and only seven percent intend to cut,
which is similar to the pricing pressures identified last spring.
More than half plan to increase prices more than two percent, which
is the upper bound of the Federal Reserve's preferred inflation
"target range."
Silver Linings: Holiday Sales, Long-Term Growth
In a sign that small businesses will remain resilient amid the
nation's sluggish economic state, eight out of 10 hope to grow
their business over the next two years. The mood brightens for some
in the fourth quarter of this year, as three out of 10 owners
expect a 'gift' of higher profits this holiday season compared to a
year ago. Among them, 70 percent expect profits to increase by at
least six percent. Meanwhile, 41 percent foresee no change in
profits from last year and 29 percent expect a decline.
An online media kit containing national and regional survey
results is available on PNC's website at
http://www.pnc.com/go/presskits.
The PNC Financial Services Group, Inc. (www.pnc.com) is one of
the nation's largest diversified financial services organizations
providing retail and business banking; residential mortgage
banking; specialized services for corporations and government
entities, including corporate banking, real estate finance and
asset-based lending; wealth management and asset management. Follow
@PNCNews on Twitter for breaking news and announcements from
PNC.
Methodology
The PNC Economic Outlook survey was conducted in August and
September 2011, by telephone within
the United States among 1,460
owners or senior decision-makers of small and mid-sized businesses
with annual revenues of $100,000 to
$250 million. The results given in
this release are based on interviews with 504 businesses
nationally, while the remaining interviews were conducted among
businesses within the states of Florida, Illinois, Indiana, Missouri, New
Jersey, Ohio and
Pennsylvania. Sampling error for
the national results is +/- 4.3 percent at the 95 percent
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.
This report has been prepared for general informational purposes
only and is not intended as specific advice or recommendations.
Information has been gathered from third party sources and has not
been independently verified or accepted by The PNC Financial
Services Group, Inc. PNC makes no representations or warranties as
to the accuracy or completeness of the information, assumptions,
analyses or conclusions presented in the report. PNC cannot be held
responsible for any errors or misrepresentations contained in the
report or in the information gathered from third party sources. Any
reliance upon the information provided in the report is solely and
exclusively at your own risk.
CONTACT:
Tim Rice
(412) 762-8033
timothy.rice@pnc.com
SOURCE The PNC Financial Services Group, Inc.