Ohio Business Owners More Optimistic, PNC Finds
YOUNGSTOWN, Ohio – Ohio business owners are much more optimistic than they were six months ago about their prospects and the health of the economy, a PNC Bank survey released today finds.
The PNC economist who analyzed the data, Mekael Teshome, reports the optimism the business owners displayed about the U.S. economy is the highest since 2009.
Manufacturing is a primary driver as the economy of the Buckeye State picks up momentum, Teshome says. While consumers have benefited from lower energy prices, he notes, the abundance of energy is “a challenge for the Utica-share related industry.”
The results of the latest semi-annual PNC survey reinforce the PNC Economics Department’s forecast last December that real economic growth this year will range between 3.25% and 3.5%, the highest since 2004.
As with all economics reports, the PNC survey has good news and not so good news.
- The good news:
- Nearly half of the business owners surveyed, 49%, expect to see increased sales, the most since 2012, and “45% expect climbing profits – the most since the survey began in Ohio in 2009.”
- More than half, 52%, believe that lower energy prices will allow them to achieve higher profits and 48% believe lower energy prices will result in greater sales.
- The owners feel less pressure to raise prices than six months ago. Thirty percent intend to raise prices compared to 33% six months ago. “This correlates with falling supplier pricing expectations,” Teshome says. “Fifty-nine percent expect their suppliers will raise their prices compared to 67% six months ago.”
- Housing prices are on the rise, a reflection of an improving economy. Forty-six percent anticipate to see the price of houses increase in the next six to 12 months compared to 36% six months ago and 33% a year ago.
The not-so-good news:
- Plans to hire remain on hold. Only 10% of those surveyed said they intend to take on full-time employees while 81% say they’ll maintain their workforces. More than half, 56%, say they haven’t added to their numbers for at least 12 months.
- Pay raises will keep pace with the cost of living, if that. Twenty-six percent said they expect to increase their employees’ pay, nearly the same as six months ago when 24% said they’d do so.
Demand for loans and increases in lines of credit remains flat as owners rely on cash on hand to fund their operations, PNC found. “Fifty-one percent said they last took out a loan or line of credit more than two years ago,” the survey found, “19% never have.”
Even so, PNC is encouraged by the 15% who said they probably or definitely would borrow compared to the 9% who responded favorably six months ago. “While the majority don’t plan to pursue new loans or lines of credit in the next six months,” PNC said, “the likelihood of Ohio business owners taking out a new loan or line of credit is increasing.”
PNC’s semiannual survey of small- to midsized business owners in its footprint dates to 2003 and included Ohio in 2009. The Artemis Strategy Group conducted the telephone survey between Jan. 22 and March 11, holding 500 interviews. Sampling error is +/- 8% at the 95% confidence level based on 153 interviews in Ohio, PNC says.
Copyright 2023 The Business Journal, Youngstown, Ohio.