A new sentiment survey finds business owners still feel good about present conditions, despite outlooks for slower economic growth and ongoing worries about talent and health care costs.
As the U.S. economy approaches a record period of expansion this summer, more than eight in 10 survey respondents told The Accident Fund Co. of America and Michigan Business Network that they remain “somewhat” or “very” satisfied with the overall economy. More than three-quarters of the 411 small and mid-sized business owners answering the semi-annual survey said Michigan remained a “good” or “excellent” market for their company’s goods or services.
More than four in 10 reported higher sales in the last six months and about one-third said they remained the same. More than 30 percent of respondents recorded increased profits, while about 42 percent said profits remained the same.
Looking ahead, more than 58 percent of respondents expect their sales to increase in the next six months and just 6.8 percent expect a decline. About half of respondents expect higher earnings during the second half of 2019; just 10 percent expect reduced profits.
Respondents were less optimistic than in the firms’ previous survey. As well, business owners remain concerned about finding talent, increasing wages and rising health care costs, according to survey results.
“Clearly, small business owners are concerned about the future,” Al Gileczek, president of Accident Fund Insurance and CompWest Insurance, said in a statement. “Business is still growing, albeit at a slower pace, and jobs remain plentiful. We are cautiously optimistic going forward.”
Another activity index cited tariffs as a key concern.
In the Michigan Retailers Association’s monthly survey, some retailers said tariffs raised their wholesale costs. The June report from the Lansing-based Michigan Retailers Association cites a recent study showing that U.S. residents have paid nearly $22 billion in additional tariffs since the trade war with China began. The findings come from Tariffs Hurt the Heartland, a coalition of 150 trade organizations.
“Tariffs are hurting retailers across the country,” MRA President and CEO James Hallan said in a statement. “We hope our stores can overcome this hurdle and see strong, steady sales for the rest of the summer.”
The association’s monthly retail index recorded a reading of 46.9 for May, down from 59.6 in April and 61.4 a year earlier.
The lower retail index reflects reduced sales reported by 31 percent of respondents in the latest survey. Four in 10 companies had sales increases while 29 percent reported no change.
Hallan attributed the results to a cool, wet spring.
“We’re hoping for sunny weather and robust tourism season in the next few months,” he said.
Over the next two months, 56 percent of Michigan retailers expect stronger sales, while 12 percent see lower sales ahead for the summer. The rest expect no change.
Meanwhile, Comerica Bank’s Michigan Economic Activity Index rose slightly to a reading of 117.9 for April. While that was 0.2 percent higher than revised results for the previous month, it was lower than the index average for all of last year.
The results, which show little change from three years ago, mark “a loss of momentum in the Michigan economy over the last three years, after accelerating strongly coming out of the Great Recession,” according to the authors of the report.
Comerica said housing starts, home prices, state trade and state sales tax revenue were positive for the month, but unemployment insurance claims, industrial electricity demand, and light vehicle production trended into negative territory for the index.