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Sunday, 06 October 2013 16:22

Although more optimistic, business owners don’t expect to hire

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Businesses across Michigan view their future business prospects with a little more optimism than a year ago, although fewer expect to hire additional employees in the next six months, according to the results from a PNC Bank survey.

The results also show that small and mid-sized business owners in Michigan view their local economy more favorably than the U.S. economy.

Among the Michigan small and mid-sized business owners answering the semi-annual survey, 13 percent indicated they were optimistic about the local economy, which compares with 7 percent in the spring and 12 percent a year ago.

Another 47 percent were moderately optimistic, versus 48 percent six months earlier and 48 percent in the fall of 2012. The remaining 40 percent of survey respondents were pessimistic, down from 45 percent in each of the two previous surveys.

Forty-two percent anticipate higher sales and 28 percent expect higher profits in the next six months.

Despite those findings, further survey results indicate that Michigan business owners are “still guarded” in their outlook, according to PNC.

Plans for business investments are “dampened,” with 48 percent planning capital projects in the next six months, versus 52 percent in the spring and 54 percent a year ago. The survey also found continued “little demand” for new loans, with 15 percent “definitely” or “probably” taking out a new line of credit in the next six months, a rate similar to the results of the past two surveys.

The biggest change from previous surveys is in hiring. Just 4 percent of respondents indicated they would hire new employees in the next six months, down sharply from 13 percent in the spring and 17 percent last fall.

Another 10 percent of respondents said they would reduce staff, up from 9 percent and 7 percent, respectively, in the previous two surveys.

Nationally, 16 percent of businesses answering the PNC survey said they would hire, and only 3 percent were optimistic about the U.S. economy and 41 percent were moderately optimistic. The remaining 56 percent were pessimistic.

The national results show that “the economy is expanding but growth remains disappointing,” said Stuart Hoffman, chief economist at PNC Bank. “These findings show small business owners are carefully taking half steps forward.”

The survey results preceded the federal government shutdown.

As PNC offers a glimpse of what business see in the immediate future, the monthly West Michigan survey of industrial purchasing managers shows the local economy “growing very slowly, but growing.”

“Barring economic disruptions at the national or international level, the current trend of slow growth should continue,” economist Brian Long, director of supply chain management research at Grand Valley State University’s Seidman College of Business, wrote in his monthly report.

Four key indexes in the report — new orders, production, employment and purchases — all improved in September from October.

For the first time, Long asked purchasing managers about their near- and long-term outlooks for future business conditions.

The responses resulted in a “moderate”short-term index of 12 for the next three to six months. The long-term index for the next three to five years registered what Long described as a “whopping”64.

“For the future of the West Michigan industrial economy, the perception looks very promising,” Long wrote.

Read 3351 times Last modified on Sunday, 06 October 2013 16:28
Mark Sanchez

Senior Writer

msanchez@mibiz.com

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