PNC Survey: Business Owner Optimism at 22-Year High

PITTSBURGH, Pa. – PNC’s latest semi-annual survey of small and mid-size businesses, which concluded Feb. 1, shows that business owner optimism about economic conditions over the next six months has reached a 22-year high amid lessening fears of a recession.

A majority of those surveyed (55%) are highly optimistic about the national economy, increasing from 34% last fall and 26% a year ago. Four in 10 (40%) are highly optimistic about the global economy, up from 25% last fall and 9% a year ago. Nearly two-thirds of business owners (63%) are highly optimistic about their local economy, up from 47% last fall and 30% a year ago.

Eight in 10 business owners (79%) report they are highly optimistic about the prospects for their own business, consistent with last fall (77%) and up substantially from a year ago (60%). 

Construction leads other sectors with 85% anticipating better times ahead for their own businesses. Larger revenue ($20 million to $250 million) business leaders express the most optimism about the national and local economies as well as their own businesses, while smaller revenue ($100,000 to less than $3 million) business owners are the least optimistic.

“Business leaders see their own businesses continuing to do well in a strong and improving economy, whereas previously they had been telling us they are doing well despite concerns about the overall economy,” said Gus Faucher, PNC chief economist. “However, risks remain. PNC expects near-term economic growth, and we will be looking closely at employment data, inflation and when and how the Federal Reserve makes decisions around interest rates.”

Based on the survey results, inflation pressures appear to be lessening. Fewer than half (47%) of businesses expect to increase prices in the next six months, down from last fall (55%). Of those expecting to take that step, just over 1 in 10 (12%) plan to raise them by 5% or more, a drop from last fall (25%) and a year ago (23%); 4 in 10 (41%) expect a smaller increase of 1% to 2%, up from last fall (19%) and last spring (32%). 

Four in 10 businesses (40%) say they expect the prices their suppliers charge to increase in the next six months, down from six months ago (49%) and last spring (47%). Four in 10 (41%) of those expecting increases in supplier prices expect only a modest 1% to 2% rise, while fewer (13%) expect an increase of 5% or more.

“Supply chain issues, which were a major contributor to the inflation spike late in 2021 and into last year, have largely dissipated,” Faucher said. “Yet employers remain under pressure due to increasing costs for hiring and compensation. As the exceptionally tight labor market loosens somewhat this year, we may see those pressures lessening.”

Published by The Business Journal, Youngstown, Ohio.