Confidence Among Small to Midsize Businesses Waning Amid Economic Downturn
May 24 2023 - 8:30AM
Business Wire
The CBIZ Main Street Index reveals rising
borrowing costs, sticky inflation and staff retention as the most
prevalent challenges facing SMBs ahead of likely recession
CBIZ, Inc. (NYSE: CBZ), a leading provider of financial,
insurance and advisory services, has released the results of its Q2
2023 Main Street Index, taking the pulse of and gauging the outlook
for small and midsize businesses (SMBs) amid the current economic
downturn. The results show contractions in all facets of business
sentiment, most notably revenue and access to credit. The responses
brought the index’s Business Confidence Study, a weighted average
of SMB confidence-focused questions, down from 68 points last
quarter to just above 60 points.
The index depicts a sharp rise in business owners who are
concerned about retaining their full staff over the next quarter,
as layoffs persist despite relatively strong month-over-month
hiring data. Almost half of respondents (48%) listed employee
retention as a top concern, up 25% from Q1. Retaining employee
headcount trailed worries about a recession (62%) and having enough
skilled workers on staff (56%) as the most common concerns, with
layoffs across many sectors continuing due to tightening credit
conditions and inflation remaining stubbornly high.
“There’s a lagging effect to last year’s interest rate hikes,”
said Anna Rathbun, chief investment officer of CBIZ Investment
Advisory Services. “The latest CBIZ Main Street Index shows the
Fed’s actions, along with other factors, are starting to open more
cracks in the foundation of the economy. A recession is like a
zero-sum game. There will be winners and losers. We’re going to be
keeping a close eye on the small and midsize businesses that are
poised to do well during the downturn. The coming months will test
the durability and savviness of business owners, especially those
in industries that are not recession-proof.”
Based on a survey conducted between April 24 and May 5, the
index analyzed responses from 753 businesses with fewer than 100
employees in 31 industries across the U.S.* The index assesses a
range of timely trends, including business sentiment, areas of
growth and decline, and price changes due to inflation and
inventory levels.
The data was evaluated from an overall perspective, as well as
based on company size, region and industry. An interactive
infographic with the results is available on the CBIZ website. Key
findings include:
- 51% of respondents have a negative or neutral outlook on the
economy: As multiple economic indicators point to a slowing
economy, the index revealed that only 49% of respondents reported
positive or very positive business confidence over the next six
months. Additionally, more than seven in 10 expected a further
downturn in the economy, on par with last quarter’s survey.
- Sharp rise in concerns about employee retention amid
unsettled labor market: A rising number of businesses are
concerned about retaining employees amid a labor market that is
experiencing steady hiring but also layoffs across many sectors.
More than 48% of respondents listed employee retention as one of
their key concerns this quarter.
- Over 75% of companies raised prices of goods and services in
the last quarter: More than three in four businesses reported
price increases by at least 1% over the past three months, up from
72% in Q1, due to high inflation remaining persistent, low
inventory levels or other factors. Additionally, more than 55% of
businesses said they’ve raised prices by 5% or more.
- Rising interest rates are having a greater impact on
business funding: Twenty-seven percent of respondents said
higher interest rates have impacted the funding needs of their
businesses, up from 17% in the first quarter. Meanwhile, 64% of
companies reported experiencing higher borrowing costs, a figure
that remains unchanged from last quarter.
*Note: Not all those surveyed in the CBIZ Main Street Index are
clients of CBIZ.
About CBIZ CBIZ, Inc. provides professional business
services that help clients better manage their finances and
employees. CBIZ provides its clients with financial services,
including accounting, tax, financial advisory, government health
care consulting, risk advisory, real estate consulting and
valuation services. Employee services include employee benefits
consulting, property and casualty insurance, retirement plan
consulting, payroll, life insurance, HR consulting and executive
recruitment. As one of the largest accounting, insurance brokerage
and valuation companies in the United States, the Company’s
services are provided through more than 120 Company offices in 33
states. For more information, visit www.cbiz.com.
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Media Rocco Aloe Gregory FCA for CBIZ, Inc.
Cbiz@gregoryfca.com 610-860-2075
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