Florida Business Owners’ Outlook Improves, But Remains Cautious on Hiring and Local Economy
Our Spring 2013 survey of small and mid-sized Florida business owners shows an improvement in business expectations and optimism compared to last Autumn ahead of the Fiscal Cliff and election uncertainty, but still more cautious than in Spring 2012. More Florida owners report weak sales as their top challenge, followed by government regulations. These findings support PNC economists’ baseline forecast that the moderate U.S. economic and jobs expansion will persist in 2013, despite higher payroll and top income tax rates, an $85 billion cut in federal spending (“sequestration”) and a recession in Europe.
The Spring 2013 findings from the biannual PNC survey, which began in 2003 and Spring 2009 for Florida, show only one in six small businesses intends to add full-time employees during the next six months. Private sector job growth, especially among small businesses that do the lion’s share of hiring, is essential to sustaining the expansion. Only 17% expect to hire full-time employees, unchanged from Spring 2012 (18%), while only 8% plan to reduce full-time staff.
A continued moderate but persistent economic and jobs growth expansion in 2013 is reflected in the cautious outlook by small and mid-sized business owners in Florida, according to PNC’s new survey findings:
• Cautious about Own Company: Just one in six (17%) are optimistic about their own prospects during the next six months, consistent with the 16% last Autumn but trailing the 25% one year ago. Correspondingly, just one in four (26%) are pessimistic, vs. 29% in Autumn and 25% in Spring 2012.
• Holding Off Hiring: Just over one-third (35%) say they are holding back on hiring until the local economy improves and nearly three in 10 (29%) say they are waiting for a more stable global economy. More than a quarter (28%) are choosing to do more work with fewer employees.
• Better Demand Supports Price Hikes: Nearly three in 10 (29%) plan to raise and only 6% intend to cut their selling prices, signaling potential pricing pressures.
• Housing Prices Rebound to Continue: Building on the dramatic turnaround first seen in our Autumn survey, 46% expect Florida home prices will rise over the coming year, up from 34% in Autumn and 29% one year ago. Only 9% expect house prices to decline, down from 17% in Autumn and 17% last Spring. This expected rebound is reinforced by sizable house price gains in 2012.
• Business Investment Plans Mixed: Half (49%) plan to spend on capital investments in the next six months, up from 43% in Autumn but down from 59% last Spring. Technology equipment remains the top priority, with other types of business equipment a distant second.
• Little Demand for New Loans: Just over one in five (22%) will probably/definitely take out a new loan or line of credit in the next six months vs. 16% in Autumn and 20% last Spring.
• Federal Actions to Stimulate Hiring: Only four in 10 (41%) think the federal government could take any actions that would positively influence their hiring plans. Reduced business regulations, increased infrastructure spending and reduced total federal spending are the preferred top three actions.
• Fiscal Cliff Deal Expected to Hurt Business and Family Finances: Just over one-third (36%) expect the American Taxpayer Relief Act to have a negative impact on their business and just under half (47%) expect the Act to have a negative impact on their own family’s financial situation in 2013.
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The PNC Economic Outlook survey was conducted between Jan. 23 to Feb. 15, 2013, by telephone within the United States among 1,718 owners or senior decision-makers of small and mid-sized businesses with annual revenues of $100,000 to $250 million. The results given in this release are based on interviews with 509 businesses nationally, while the remaining interviews were conducted among businesses within the states of Alabama, Florida, Georgia, Illinois, Indiana, Michigan, North Carolina, Ohio and Pennsylvania. Sampling error for the national results is +/- 4.3 percent at the 95 percent confidence level. The survey was conducted by Artemis Strategy Group (www.ArtemisSG.com), a communications strategy research firm specializing in brand positioning and policy issues. The firm, headquartered in Washington D.C., provides communications research and consulting to a range of public and private sector clients.
This report has been prepared for general informational purposes only and is not intended as specific advice or recommendations. Information has been gathered from third party sources and has not been independently verified or accepted by The PNC Financial Services Group, Inc. PNC makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. PNC cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Any reliance upon the information provided in the report is solely and exclusively at your own risk.