Small- and medium-sized business leaders are optimistic about the national economy, according to the PNC Economic Outlook, a semiannual survey conducted by PNC Financial Services Group.
Half of the respondents described themselves as optimistic as of spring 2018, up from 29 percent in the fall of 2017.
Further, 85 percent are positive about the business climate during the next six months, up from 74 percent in the fall of 2016. The percentage of business leaders who felt negative about the economy in the next six months was in single digits.
“Small businesses are a key source of economic activity and employment, and owners’ perceptions can be a good indicator of what’s to come,” Gus Faucher, chief economist of the PNC Financial Services Group, said. “The overall findings from our biannual survey, which began in 2003, confirm that the U.S. economic expansion, now almost nine years old and the second-longest in U.S. history, will continue throughout 2018.”
Also, 61 percent expect demand for their company’s products or services to increase in the next six months, up from 51 percent in fall 2017. In addition, 51 percent said they have a good balance between the volume of business and their capacity to handle it, while 14 percent said they would need to hire more people to handle it.
The survey also revealed that 49 percent of business leaders expect to increase their employee compensation in the next six months, up from 37 percent in fall 2017. This is the highest rate 2007.
About 32 percent expect to add full-time staff, while 25 percent plan to hire part-time staff.
“With support from tax cuts and an increase in federal spending, U.S. economic growth will accelerate in 2018 and the labor market will continue to tighten,” Faucher said. “To prevent the economy from overheating, the Federal Open Market Committee will continue to gradually raise the federal funds rate throughout 2018.”
Finally, 69 percent of respondents anticipate increased sales during the next six months, while 64 percent expect increased profits. Also, 41 percent expect to charge their own customers higher prices, citing increasing business and favorable market conditions as the primary reasons.
The survey of 500 business leaders was conducted from Jan. 12 to March 6, 2018.