Our economics team continues to stress the importance of private sector job growth, especially among small businesses that do the lion’s share of hiring, as essential to sustaining U.S. economic expansion. This latest survey strongly supports PNC economists’ baseline forecast that the U.S. economic and jobs expansion will proceed at a faster pace over the next year, sustaining the spring rebound after harsh winter weather weighed on economic growth earlier this year.
See how your own sentiment and business outlook stack up against other small and mid-sized business owners in North Carolina.
- Optimistic about own company: 77 percent are optimistic about their own company’s prospects during the next six months, versus 80 percent in the spring and 79 percent one year ago. Only 22 percent are pessimistic compared to 20 percent in the spring and 19 percent one year ago.
- Optimistic about state economy: Three in five (61 percent) are optimistic and 38 percent are pessimistic about the North Carolina economy for the next six months.
- Weather woes linger: Three in 10 (31 percent) were adversely affected by the extreme weather conditions at the start of the year. Half (53 percent) of those affected say their business has not yet recovered completely.
- Hiring plans improve: 17 percent plan to add full-time employees versus 12 percent in the spring and 8 percent one year ago. Only 9 percent plan to reduce full-time staff. Among the 76 percent not hiring, the most common reasons are concern about economic growth (37 percent) and choosing to do more with fewer employees (30 percent). Nearly three in five (58 percent) of those not hiring say they need sales to increase 3 percent or more to add workers.
- Bigger pay raises: One of four (27 percent) plan to increase employees’ compensation during the next six months, up from 19 percent in spring and 18 percent one year ago. Half (54 percent) plan wage hikes of at least 3 percent, which is up from the recent national wage trend of near 2 percent. Meanwhile, 24 percent say finding qualified employees is harder than six months ago, consistent with 23 percent in autumn 2013.
- Bigger price hikes: 37 percent plan to raise their selling prices and only 3 percent intend to cut their prices. Of those planning hikes, 27 percent plan to increase prices by 1 percent to 2 percent while 43 percent plan to increase prices by 3 percent to 4 percent, which is above the Federal Reserve's 2 percent inflation goal. Thus, price inflation looks poised to speed up with nine of 10 (92 percent) expecting overall consumer prices to rise in the coming year.
- Credit demand low, but availability improving: 13 percent will probably or definitely take out a new loan or line of credit in the next six months, little changed from 14 percent in the spring. Twenty-five percent report that credit is easier to get than three months ago, up from 12 percent one year ago. Sixteen percent say it is more difficult.
- Health care policy: 56 percent do not expect the Affordable Care Act to impact their business in the next six months. Of the 31 percent who expect to be affected, the vast majority (95 percent) say the impact will be negative.
- House prices continue rising: Half (49 percent) expect home prices in their local market will rise over the coming year, up from 39 percent in the spring and little changed from 53 percent one year ago. Only 7 percent expect house prices to decline, about the same as in the spring.
For additional insight on the survey and Wilmington economic trends from PNC economist Mekael Teshome, read this recent Greater Wilmington Business Journal article.
Chris George is senior vice president at PNC Bank and longtime Wilmington resident. He has served PNC and its predecessors for more than 20 years in various leadership roles. PNC Bank, N.A., a member of The PNC Financial Services Group, Inc., is one of the United States’ largest diversified financial services organizations, providing retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management.
These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.