Small and mid-sized business owners in Michigan are more optimistic about the foreseeable future than they have been in five years, according to a spring survey by PNC Bank.
More than six out of 10 business owners surveyed expect higher sales in the next six months and 93 percent told PNC Bank they feel optimistic about their company’s prospects. That compares with 45 percent who a year ago said they expected higher sales and 85 percent who were optimistic about the future.|
The spring 2017 results are the best since PNC started the semi-annual survey in 2012 and reflect the continued strong performance of Michigan’s economy, according to PNC economist Kurt Rankin.
“The results align with reality because the state’s economy is doing very well,” said Rankin, noting Michigan’s unemployment rate was doing “exceptionally well” at 4.8 percent in March.
Forty-six percent of respondents also expect increased profits, which is comparable to last spring but up from 38 percent last fall. Nearly two in 10 expect to increase full-time hiring, down from 24 percent in the fall.
Jobs gains in Michigan are coming from across the economy, including business services, transportation, leisure and hospitality, and construction, Rankin said. Job growth has boosted consumer confidence and spending, which should hold up even as the auto industry slows from historic highs of recent years, he said.
Elsewhere in the PNC survey, 85 percent of Michigan small and mid-sized business owners said they were optimistic about their local economy and 87 percent felt that way about U.S. economic performance over the next six months. Both are significantly higher than 12 months ago, when 70 percent were optimistic about the local economy and 55 percent were for the U.S. economy.
Rankin attributes the rise in optimism to the election of President Donald Trump in November and his campaign promises to lower the federal corporate tax rate, ease regulatory burdens, enact a massive infrastructure-spending program, and repeal and replace the Affordable Care Act.
The optimism is sustainable “so long as some of the campaign promises by the Trump administration are followed through with,” Rankin said.
Michigan’s economy is now in its eighth year of recovery after nine years of decline, according to the latest economic outlook for the state from the University of Michigan.
The outlook, released a month ago, projects annual job growth “cooling off over the next two years from its recent red-hot pace” that averaged 1.8 percent from 2009 to 2015, U-M economists wrote in their outlook. They project the state to record job growth of 0.9 percent for the first quarter and 0.7 percent for the rest of the year, then increase to 1 percent in 2018.
That translates to 32,700 new jobs this year and 45,100 next year, which are smaller gains than in recent years.
U-M forecasts that manufacturing employment will decline modestly, “reflecting the more mature stage of the recovery and flat … vehicle sales combined with further productivity gains.”