More Ohio Businesses Plan to Hire, Boost Wages
PITTSBURGH – More small and mid-sized businesses in Ohio are optimistic about their prospects over the next six months, The PNC Economic Outlook reported today.
The economics department of PNC Financial Services Group cites the growing number of business owners who, over the next six months, plan to hire more full-time employees, grant raises and expect to see their sales and profits increase.
The numbers are a little higher than in the survey PNC conducted last spring, economist Mekael Teshome said.
“Manufacturing, health care and professional services will lead Ohio’s job growth,” Teshome writes, “with education, retail, finance, leisure and hospitality providing support. Utica shale natural gas drilling operations hold promise for new jobs, income and tax revenue. Lower energy costs are a boost for consumer spending. Downside risks come from a weak global economy and a strong dollar that could hurt exports more so than expected.”
Key findings of the PNC survey of business owners’ outlook for the next six months:
- More pay raises: Where 26% of business owners in the spring survey expected to grant pay raises, the figure rose to 36% in the fall survey. Moreover, 59% said they plan to increase compensation 3% or more, which is above the rate of inflation.
- Good help wanted: Four in 10 — 40% — said it’s harder to find qualified employees today than it was six months ago. Eleven percent say they’re not hiring because they can’t recruit the right skilled workers.
- Further decline in pressure to raise prices: A year ago, 33% said they planned to raise the prices they charge where today it’s 28%. For the prices suppliers charge, 60% said they expect to increase their prices versus 59% last spring. Partially reflecting the sharp drop in energy prices, 78% of business owners expect to see a hike in consumer prices where that figure was 89% a year ago. Teshome called it “encouraging that inflation pressure is lacking.”
- Housing prices still rising: More than half, 53%, expect to see the price of houses in the communities where they live to increase over the next six to 12 months. Last spring that figure was 46% and a year ago it was 36%.
In the fall survey, 19% of business owners said they expect to hire at least one full-time employee compared to 10% last spring. Three in four, 75%, foresee no change in the number in their workforces where that figure was 81% last spring. The number who expect to see a smaller workforce, whether through attrition or layoff, was 4% in both surveys.
On the other hand, PNC found that 26% of business owners across the United States (versus 19% in Ohio) plan to hire, the most since PNC began the semi-annual surveys in 2012, and 52% expected to see an increase in sales.
Where 82% in Ohio were optimistic about the outlook for their companies last spring, the number rose to 84% in the most recent survey. For the United States, 88% expressed optimism.
Nearly six in 10, 59%, of business owners in Ohio expect to show a net profit this year, PNC found, the average profit being about 7% of sales. Seventeen percent project they’ll make more than 10% above their operating expenses.
Of those who expect to have excess cash, 50% said they’ll use it to invest in business operations, 34% said they’d distribute it to the owners, 32% would add it to their cash reserves and 29% would use it to retire debt. (Owners could choose more than one use; hence percentages when added exceed 100%.)
Because of the sustained levels of profits, the need to borrow or increase their borrowing is static, PNC learned. “86% of owners say they will not pursue new loans or lines of credit in the next six months,” Teshome writes,” while 12% will.”
Asked about access to credit today compared to three month agos, 15% said it’s easier while 20% said it’s harder.
Copyright 2023 The Business Journal, Youngstown, Ohio.