PNC Finds Businesses Positive about Economy

PITTSBURGH – The Ohio and U.S. economies are performing well – “Ohio’s economy is at cruising speed,” reports PNC economist Mekael Teshome – the difference being the greater extent Ohio businesses expect to add to their workforces over the next six months.

Where small- to middle-market business owners across the United States are “upbeat about the economy,” PNC says, “Few plan to hire,” where in Ohio, “More plan to hire.”

In the latest PNC Economic Outlook, released today, the economics department at PNC Financial Services Group Inc. says its most recent survey of small- and middle-market business owners “confirms that the fundamentals are solid for the U.S. economy. PNC forecasts moderate economic growth for the rest of this year that will carry into 2017.”

And PNC chief economist Stuart Hoffman expects, “This growth will support a federal funds increase in the Federal [Reserve] Open Market Committee’s meeting in mid-December.”

“Ohio’s economy is at cruising speed, with manufacturing, health care finance and professional services leading job growth,” Teshome says.” Consumer finances continue to improve, likely stimulating a record year for auto sales.”

PNC did not break out the segment surveyed in the Mahoning Valley.

Artemis Strategy Group conducted the survey between July 21 and Sept. 11, completing 1,867 telephone interviews nationally, 150 of them in Ohio. Of those in Ohio who responded:

• Seven in 10, or 70% of owners are optimistic about the health of the regional economy, up from 65% last spring. Sixty-five percent are positive about the U.S. economy, up from 59% last spring, and 83% are optimistic about their companies’ prospects compared to 81% last spring.
• Nearly half, 49%, said “hope” best describes their feelings about their companies’ prospects while 19% chose “enthusiasm,” 10% said “fear” and 7% said “despair.”
• Better than four in nine, or 46%, expect inflation to remain in check although 31% expect to raise their prices compared to 26% last spring.
• Two in nine, or 22%, expect to increase capital spending where two in 10, or 20%, said so last spring.
• Nearly two-thirds, or 63%, expect to report a net profit for the year, down from 73% six months ago. Eight percent said they expect to make more than 10% above their operating expenses compared to 23% last spring.
• Sixty-six percent were unhappy about having to choose between Hillary Clinton and Donald Trump for president. They said neither nominee is “addressing the issues most important to them as business owners,” Teshome said.

Key findings among all 1,867 who responded:

• Stable outlook for sales and profits. “Half (51%) expect their sales to increase during the next six months,” Hoffman said, “and 47% say profits will rise – consistent with the past two surveys.”
• Few plan to hire. Only 22% expect to add employees – that figure was 24% last spring – and 28% of those not hiring say they can do “more work with fewer employees.”
• Business owners perceive that inflation “may remain in check.” Fewer expect their suppliers to raise their prices – 37%, down from 44% last spring and 50% a year ago – but 23% expect they’ll raise their prices. Those figures were 29% last spring and 28% a year ago.
• Limited capital spending. Only 20% said they intend to increase capital spending versus 30% last spring and 33% a year ago.
• More than seven in 10, 71%, expect they’ll make a net profit for 2016, consistent with six months ago. Nearly a quarter, 23%, expect to male more than 10% above their operating expenses, same as the finding in the spring survey.
• And as those in Ohio, nearly two-thirds, or 63%, are not satisfied with how Trump and Clinton are addressing their concerns as business owners, up from 53% six months ago.

PNC also found that most business owners are “unfazed” by the new U.S. Department of Labor rules governing overtime pay that take effect Dec. 1. Slightly more than four in 10 owners, or 42%, reported they have at least one employee who will be affected (the employee qualifies to be paid overtime atop his salary), but nearly eight in 10 said it “would not affect hiring in any way.” Just one in 10 say they would reduce workforce or cut back on hiring while 5% say they would hire more part-time employees.

Methodology: Artemis, based in Washington, D.C., conducted telephone interviews with 1,867 owners or senior decision makers of small and midsized businesses in Alabama, Florida, Georgia, Illinois, Indiana, Michigan, North Carolina, Ohio, Pennsylvania and Washington, D.C. Sampling error is +/- 4.4% at the 95% confidence level.

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