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Survey: Business prospects look strong through year-end in Michigan

BY Sunday, July 31, 2016 08:00pm

Business owners across Michigan maintained a relatively upbeat view of the state’s economy at midyear.

Nearly two-thirds of small- and medium-sized business owners and executives surveyed in May and June said they were satisfied with the state economy as it affects their business. However, growth indicators for sales, earnings, hiring and wages slowed after hitting record highs in December.

Those results come from the semi-annual survey by Lansing-based workers’ compensation carrier Accident Fund Insurance Company of America and the Michigan Business Network.

Most of the survey’s 636 respondents said “that sales, profits, wages and hiring aren’t going up” but companies “indicate that they are holding steady, not declining,” according to a report on the survey results. “Though still largely positive, the record optimism shown around the holiday season has been tempered by the realities of doing business, which is a pattern often seen in a growing economy.”

“Small businesses remain largely positive about their prospects for doing business in Michigan,” Accident Fund President Mike Britt said in a statement. “Although projections of growth have slowed since December 2015, overall sales and profits remain strong with little sign of decline.”

In looking ahead, 60 percent of respondents said they expect higher sales in the next six months, versus 63 percent in the prior survey last December. In West Michigan, 66 percent of respondents expect higher sales through the end of the year.

Fifty-four percent of small business owners statewide and 56 percent in West Michigan anticipate higher earnings in the second half of the year.

Thirty-four percent plan to hire additional staff, down from 40 percent in December, and 57 percent will maintain employment levels. More employers – 62 percent in June, compared to 52 percent late last year – intend to increase wages in the latter half of the year.

Employers answering the survey also reported an improved labor pool. More than half rated the labor pool positively, compared to 46 percent in December, and the number reporting difficulty filling open jobs declined to 45 percent from 49 percent.

Meanwhile, the Michigan Economic Activity Index for May — released this week — dipped 0.6 percentage points from the prior month to 128.3, according to a report issued by Comerica Bank. The reading was still above the average of 123.7 for all of 2015.

Chief Economist Robert Dye cited an easing trend in auto production, exports, housing starts, sales tax and hotel occupancy for the decline.

“The push to the Michigan economy from the post-recession rebound in the auto industry is dissipating,” Dye said in a statement.

Additionally, the strong U.S. dollar and soft global demand remain headwinds for exports, he added, noting that a weakening yen will help the Japanese auto industry “at the expense of U.S. and European automakers.”

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