PNC Financial Services Group Inc.’s latest semiannual survey of small and mid-sized businesses, which concluded Aug. 6, indicates that business owner optimism remains high, lending support to PNC’s forecast of a soft landing for the U.S. economy.
A majority (56%) of business owners are highly optimistic about the national economy, above last spring’s 55% and up significantly from 34% one year ago. Most (62%) are optimistic about their local economy. Global economic optimism at 39% is little changed from last spring’s 40%.
Seventy-six percent of owners are optimistic about the prospects for their own business, consistent with the measures six months and one year ago (79% and 77%, respectively), but that is significantly higher than the survey’s historical average optimism of 39%.
While recession concerns have crept into the economic rhetoric, only 33% of business owners think the impact of the U.S. economy on their own business is major, with the majority feeling the impact is either minor (43%) or of little or no impact (24%). There are no significant differences in the level of recession concern by region or across revenue or industry categories.
A survey high of 29% of business owners anticipate requesting a new loan or line of credit in the next six months. Three in 10 expect capital spending to increase in the next six months, a significant jump from last spring’s 21%. Top areas for planned investments or improvements are human resources practices, products/services, and technology.
Sixty-four percent of business owners expect an increase in demand for their products or services in the next six months, up sharply from 56% last spring and matching expectations from one year ago. To meet demand, a survey high of 41% of owners expect the level of inventory to increase in the next six months.
The number of businesses planning to raise prices in the next six months (61%) increased significantly from spring (47%), second only to the survey high recorded in spring 2018. Among businesses expecting to increase customer prices, 38% expect to raise them by 5% or more, the highest reading since 2010.
Full national and regional survey results are available here.
