- Nearly six in 10 small and mid-sized business owners are highly
optimistic about their own company's prospects in the next six
months, a survey high.
- Almost two-thirds believe business conditions in the U.S. will
improve.
- Fewer business owners plan to increase their own prices to
customers by 5% or more than in 2022.
PITTSBURGH, Feb. 27,
2023 /PRNewswire/ -- Based on the results of PNC's
latest semi-annual survey of small and mid-sized businesses, which
concluded Feb. 6, it appears that
resilient business owners are defying predictions of an economic
downturn later this year. In fact, business owner optimism about
the outlook for their own businesses in the next six months has
reached a 20-year survey high.
Six in 10 business leaders feel highly optimistic about the
prospects for their own company despite remaining cautious about
the national and their local economies. The gap between optimism
for their company versus the broader U.S. economy is now at a
survey high of 34 percentage points, nearly double the historic
survey average (18 percentage points).
The survey, now in its 21st year, also revealed that leaders are
expecting a better overall business environment with nearly
two-thirds (63%) expressing belief that business conditions in the
U.S. will improve in the next six months and a majority (58%)
expecting to see sales increases in the same timeframe.
"Although we expect the Federal Reserve to continue to raise
interest rates in the spring of 2023 and economic growth is
slowing, businesses remain optimistic about their own near-term
prospects. In particular, business owners are finding that strong
market conditions are prompting decisions to raise prices for the
goods and services they offer," said Gus
Faucher, chief economist of The PNC Financial Services
Group.
Business owners also see an easing in pricing pressures. Fewer
businesses than in the last three waves of the semi-annual survey
report that they plan to increase their own prices to customers by
5% or more in the next six months. In addition, fewer than half
(47%) anticipate supplier prices to increase in the next six
months, down from over half (53%) last fall and returning to a
level similar to a year ago (46%). Fewer businesses (21%) expect
consumer price increases of 5% or more in the U.S. economy,
overall, compared to last fall (36%).
Supply chain concerns also are declining. More businesses expect
supply chain timeliness to improve compared to six months ago, and
fewer are experiencing inventory shortages. While supply chain
disruptions remain the top worry for two in 10 (18%) owners, this
area of concern no longer stands out significantly from others, and
in fact, matches the proportion primarily concerned about the cost
of materials (18%).
"It is clear that inflationary pressures are easing. Businesses
are finding it easier to obtain materials and supplies, inventory
levels are returning to normal, and businesses are expecting
inflation to slow. But with the tight job market, labor costs
remain a concern," Faucher said.
The portion of business owners expecting to increase their
number of full-time employees declined from six months ago, while
the difficulty in hiring remains constant. Specifically, a little
more than one in 10 (13%) business owners expect to increase their
number of full-time employees over the next six months, down from
two in 10 (21%) last fall and a year ago (20%). A similar portion
(15%) expect to increase the number of part-time employees over the
same timeframe, unchanged from last fall and up from 8% a year
ago.
Among businesses actively hiring employees, more than one-third
(36%) say it's become harder to hire qualified candidates over the
past six months, similar to last fall (39%) and last spring (36%).
The most common barrier among those having difficulty hiring is the
lack of applicants (47%). Other challenges facing business leaders
experiencing difficulty in hiring qualified employees include
candidates' lack of job-related skills or experience (22%) and
compensation requirements that are higher than the business can
afford to pay (19%).
Other findings in the survey include:
- Quest for Credit: Nearly two in 10 (17%) business owners
expect to request a loan or line of credit in the next six months,
up from last fall (6%) and a year ago (11%). Among the eight in 10
unlikely to request a loan or line of credit, more than
three-quarters (77%) say they have no need for funds; one-quarter
are hesitant to take on debt, less than two in 10 (16%) feel the
cost of credit is too high and only a few (8%) have a concern about
the loan process or the ability of the business to qualify.
- Preparing for Cash Flow Issues: Three-quarters (74%) of
businesses are currently maintaining an emergency cash reserve
fund, up sharply from 58% last fall. Among businesses with an
emergency reserve, half consider the amount to be about average
(50%), similar to last fall (54%), while four in 10 say their
current reserves are higher than what is typical for the business
(41%), an increase since last fall (28%). Construction businesses
are among those most likely to report higher reserves than normal
(56%), particularly compared to 35% of service and 38% of
retail/wholesale industry businesses.
Full national and regional survey results are available at
pnc.mediaroom.com.
The PNC Financial Services Group, Inc. (NYSE: 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 1/3/2023 to
2/6/2023, among small and mid-sized businesses 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) 370-3887
alan.aldinger@pnc.com
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SOURCE The PNC Financial Services Group, Inc.