PITTSBURGH, Sept. 17, 2019 /PRNewswire/ -- Despite
pricing pressures and tariff concerns, measures of optimism are
approaching the record-setting highs measured in spring 2018,
according to the latest PNC semi-annual survey of small and
mid-size business owners and executives. Optimism among business
leaders about their own company is particularly strong at 55%
compared to one year ago (51%) and near the spring 2018 record high
for this 16-year survey (58%).
Thirty-nine percent of respondents describe their outlook for
the national economy as highly optimistic. Those pessimistic about
the national economy hit a survey record low of 7%. Those
expecting an increase in the need for financing (8%), employee
health care costs (35%), and personal compensation and retirement
(22% and 25%, respectively) all declined from a year ago.
"U.S. economic fundamentals remain solid, despite slower
economic growth and the ongoing trade war between the United States and China," said Gus
Faucher, chief economist of The PNC Financial Services
Group, Inc.
Nearly two-thirds (63%) of small and mid-size business leaders
expect their company's sales to increase, little changed from fall
2018 (64%), but below the near record high of 69% (spring 2018).
However, 52% expect their profits
to increase, down from fall 2018 (59%).
Key survey findings include:
Price Promotion: Tariff concerns appear most notably in
relation to supply chains. Thirty-eight percent of small and
mid-size business owners and executives anticipate tariff policies
to trigger higher supplier prices over the next six months, and a
small but increasing number (13%) expect their total sales to
decrease based upon their understanding of tariffs. Overall,
supplier price increases are expected most by industries that are
the biggest purchasers of goods: wholesalers/retailers (50%);
construction (43%); and manufacturers (42%). Only 26% of
respondents from the services sector anticipate rising costs from
suppliers.
Inflation Consternation: Expectations for consumer prices
are important indicators of inflation, and 84% of respondents
expect these prices to go up over the next 12 months. Business
leaders expecting inflation of 3 percent or more jumped to 43%
(37% in fall 2018), with 33% expecting 3- to 4-% inflation and 11%
anticipating 5 percent inflation or higher.
Recession Impressions: 67% of respondents say a recession
is unlikely and 30% say it is likely before the end of 2019. But
there is a shift in the outlook for a recession in 2020, with
businesses split on their outlook: 46% believe it is unlikely,
while 47% believe it is likely. Looking further ahead, optimism
wanes, with only 34% believing a recession is unlikely in 2021.
"PNC expects the current economic expansion, already the longest
in U.S. history, to last into 2020. However, the risk of recession
in 2020 and 2021 has risen in recent months, due to increased trade
tensions and reduced fiscal stimulus," said Faucher.
Finders Keepers: 33% of small and mid-size business
leaders plan to increase the number of full-time employees within
the next six months, tying the survey record high from spring 2005,
while those expecting to reduce the number of full-time employees
remains at 3%, near the survey low (2% spring and fall 2018).
Nearly half (47%)—a record high for the survey—say it's harder to
find qualified employees than it was six months to a year ago, with
54% reporting increased wages/salaries, up from 44% in fall 2018.
In addition, 31% have allowed more flexible work arrangements, 27%
have increased benefits, and 25% have offered or increased
bonuses.
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 7/1/2019 to
8/23/2019, among small and mid-sized businesses. 502
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:
Rob Tacey
(302) 429-2743
robert.tacey@pnc.com
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SOURCE PNC Financial Services Group, Inc.