Small business owners nationwide are increasingly optimistic about their sales and profits amid recent benefits from lower energy prices and growing enthusiasm about the U.S. economy, according to the latest PNC Economic Outlook Survey findings.
The spring findings of PNC’s biannual survey, which began in 2003, reveal that the majority (83%) of business owners are optimistic about their company’s overall prospects while 70 percent, the most since 2007, are optimistic about the U.S. economy. Further, 57% expect sales to increase and 51 percent anticipate profits to climb during the next six months, the most since 2012 and 2007, respectively.
This positive outlook is fueled by lower energy prices as 55% say they will have a positive impact on profitability. Forty percent plan pay raises for their employees, a significant lift from 32% one year ago.
As expectations for supplier price increases have gone down, just three in 10 (29%) will raise selling prices, down from 37% a year ago. Of those planning hikes, 38% will increase by 1-2%, aligned with the Fed’s two percent target. This correlates to falling supplier pricing expectations &mdash’ 52% expect an increase in supplier prices compared to 62% six months ago &mdash’ and is also aligned with the FOMC’s recent small downward revision to inflation in 2015.
“As crude oil prices fell to six-year lows, both consumers and businesses experienced savings that are now reflected in business optimism,” said PNC’s Chief Economist Stuart Hoffman. “As inflation pressure eases, wages and consumer spending power will tick upward. In response, business owners are expecting a better 2015 which directly supports what PNC forecasts will be the fastest real GDP growth since 2004.”
Hiring and Financing Needs Remain Limited
Twenty-two percent plan to add full-time employees while 72% will keep staffing the same — both similar to the fall results. Thirty-nine percent claim it has been more than two years since they last increased staff, with the average increase of 5-6 employees among that group.
Although expectations for business prospects are promising, loan and credit demand continue on a slow path upward. While the majority are not seeking outside financing, 22% claim they probably or definitely will take out a new loan or line of credit in the next six months compared to 17 percent in the fall. Forty percent last took out a loan or line of credit more than two years ago while 23% never have. Other key findings include
The PNC Economic Outlook survey was conducted between January 22 to March 11, 2015, by telephone within the United States among 1,858 owners or senior decision-makers of small and mid-sized businesses with annual revenues of $100,000 to $250 million.
Like this story? Begin each business day with news you need to know! Click here to register now for our FREE Daily E-News Broadcast and start YOUR day informed!
One Reply to “PNC Economic Outlook: Business Owners Expect Higher Sales”
This is great news.