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Business outlook improves slightly
YOUNGSTOWN
A recently released study found optimism among U.S. small- and midsize-business owners is growing gradually, in step with a recovery that has made slow but steady inroads since emerging from the depths of the Great Recession.
However, the outlook of business owners has lagged in Ohio, a state that was hit particularly hard by the economic downturn and has recovered at a rate slower than the national average.
A semiannual report by PNC Financial Services Group Inc. showed 37 percent of U.S. small- and midsize-business owners are feeling optimistic about their company’s future, up significantly from 22 percent just six months ago.
Owners’ hiring plans are strong, with 22 percent saying they plan to hire full-time employees, compared with 16 percent in October, and their plans for investing are even stronger. Sixty-five percent of respondents — a bump of 7 percent — said they plan to make capital investments in the coming months.
“Owners’ expectations for sales, profits and hiring for the next six months are all significantly higher than the 2013 results and the most optimistic since spring 2012,” the study found of respondents across the country.
Though improving, attitudes in Ohio were more tempered.
In this state, 28 percent of small-business owners viewed the short-term prospects for their firms positively, up from 22 percent in the fall and 21 percent last spring.
But the spike in optimism was not enough to spur owners to take on more full-time employees. Hiring intentions were down with only 10 percent planning to expand their payroll, a dip from 17 percent in the fall and 14 percent a year ago.
Expectations for sales and profits remained largely flat among Ohio business owners.
The different responses reflect two stories of the recovery, said Gus Faucher, senior economist for PNC Financial Group.
On the one hand, in the past few months, the country has moved past much of the uncertainty that had acted as a drag on the recovering economy. With debates surrounding the federal shutdown, the debt limit, tax rates on businesses, the 2014 budget and the new health care law largely settled, owners finally are starting to get a glimpse of what a post-recession economy might look like, he said.
“A lot of the political issues have been resolved, so businesses can plan better,” Faucher said.
On the other hand, Ohio’s recovery has trailed the nation’s, with the state unemployment rate consistently trailing the national rate until last month.
Meanwhile, employment is still down 3 percent from its pre-recession peak, compared with 1 percent nationally.
After surging early in the recession, the state’s manufacturing sector stalled, holding back the recovery later on, especially in the Mahoning Valley.
“It’s an area that really has not seen as much of a benefit from the recovery as the state and the nation,” Faucher said.
This area also has suffered from weak demographics, with many leaving the Valley in the past few years.
“Without many people moving to the area, you actually have a population outflux,” he said.
Leanna Dunaway, owner of Trumbull County Abstract Co., described the economic situation as a “plateau.”
While Dunaway no longer worries about making payroll, she said she is not in a position to hire or make big changes to her Warren business, which employs four.
“We’re not going to fall any more,” she said, but “I don’t see any signs of an upsurge.”
Still, the economy is recovering, albeit at a far less robust pace than hoped for.
Seven in 10 respondents to the PNC survey expressed at least moderate optimism about Ohio’s economy for the next six months, and Faucher expects 2014 to have the best pace of economic comeback yet.
PNC Financial Services contracted Artemis Strategy Group to conduct the survey by phone from Jan. 21 to March 7. The group interviewed 501 businesses nationwide, including 151 in Ohio.