Seven out of 10 executives responding to a recent Business Leaders for Michigan survey say their business now performs better than prior to the COVID-19 pandemic, although labor shortages and inflation concerns persist.
In the latest survey by the business roundtable of corporate CEOs and university presidents, 85 percent of respondents said they expected to have trouble filling open jobs over the coming six to 12 months. The problems were expected across all sectors.
“We must take significant steps to address the labor shortage across our state,” Business Leaders for Michigan President and CEO Jeff Donofrio said in a statement.
The organization’s recent annual benchmarking study shows that Michigan’s labor participation rate ranks 41st in the nation and that companies “are feeling the effects,” Donofrio said, adding that additional state and federal resources are now available to tackle the issue.
“The historic state budget surplus gives Michigan a unique chance to increase the number of people with degrees and credentials and remove barriers to work, helping solve these talent gaps,” he said.
Additionally, nearly half of survey respondents said they expect inflation that’s been running at 40-year highs to continue at its current rate. About one-third, or 34 percent, expect inflation to increase over the next six months to a year, and 16 percent believe it will ease.
An updated U.S. economic outlook issued two weeks ago by the University of Michigan Research Seminar in Quantitative Economics expects inflation to ease through the year. While economists forecast a 6.3-percent Consumer Price Index increase in the first quarter, the CPI is then expected to moderate with average increases of 5.5 percent for 2022 and 3.5 percent in 2023.
“Near-term inflation is likely to remain elevated, but we see some hopeful signs that a slowdown later in 2022 may be in the cards. Rent increases for new tenants, used vehicle price inflation, and several key producer price inflation measures may have already peaked or appear likely to peak very soon,” University of Michigan economists wrote in their Feb. 18 outlook.
More than 40 percent of respondents to the Business Leaders for Michigan survey believe the U.S. economy will hold steady, 28 percent said it will improve, and another 28 percent expect worse economic conditions for the nation.
Nearly a quarter expect the state’s economy to worsen in the next six to 12 months, 22 percent said it will improve, and 55 percent expect it to remain the same.
An updated state economic outlook issued this week by the University of Michigan said Michigan’s labor market “ended 2021 on a strong note” and gained an average of 20,400 payroll jobs monthly in the fourth quarter. Michigan has recovered more than 80 percent of the jobs initially lost in the COVID-19 pandemic, the economists wrote.
“We are optimistic that with the decline of the Omicron wave of the pandemic and ongoing, if unsteady, improvements in supply chains, 2022 will see the strong recovery of Michigan’s labor market continue. We now project Michigan’s payroll job count to recover to its pre-pandemic level by the third quarter of 2023,” the state outlook said.