PNC: Business owners' enthusiasm wanes, but optimism remains

10/4/2017

Optimism among owners of small and medium-sized Ohio businesses has waned somewhat because performance under the Trump administration has not met expectations, though owners remain “highly optimistic,” according to PNC Bank’s fall 2017 survey of business owners.

According to the survey, 27 percent of Ohio business owners are strongly optimistic about the national economy, down from 45 percent in the spring. Though there's been a steep drop, optimism currently still ranks much higher than this time in 2016, when only 8 percent of owners said they were strongly optimistic.

Further evidence that owners still have good expectations for the future — though with tempered enthusiasm — is that pessimism has only increased from 8 percent to 14 percent. Most of the change in outlook has been owners switching from strongly optimistic to moderately optimistic, according to the survey.

“After last spring’s record-high levels of optimism in the eight-year history of PNC’s survey in Ohio, business leaders’ optimism about the national and local economy, as well as their own business for the next six months, tempered slightly this fall, but still remains higher than one year ago,” the report says.

That trend is mirrored in business owners’ views of their local economies, with optimism dropping from 40 percent to 27 percent. Most of that change saw expectations shifting toward moderately optimistic, which went from 49 percent in the spring to 62 percent now. Pessimism only grew from 8 percent to 9 percent.

Mekael Teshome, an economist for PNC, said surveyors did not ask business owners about specific expected Trump administration policies that haven’t materialized, but said he believes tax policy, infrastructure spending, regulatory changes, and health care reform were areas where business leaders had anticipated major change that so far has not been enacted. 

Nearly 60 percent of Ohio business owners expect sales to grow, and slightly more than half predict profits to increase. Twenty percent anticipate hiring additional staff, while just 7 percent plan to reduce employees.

The survey found that 31 percent of owners find it harder than six months ago to find qualified job candidates, with inadequate skills and experience the top contributing factor, followed by a lack of applicants and candidates needing higher pay than offered.

A new survey response showed that 9 percent of business owners blamed applicants’ inability to pass a drug test as a contributing factor.

For its survey, PNC conducted 500 interviews nationally, with 150 of those in Ohio. The survey had a margin of error of 4.4 percent.

The report states that demand for steel has stabilized, and the health-care, finance, and education sectors are growing, allowing Ohio’s economy to grow at about the same rate as in 2016.

Mr. Teshome said goods producing industries have had a tougher time, with auto sales potentially peaking, and manufacturing not expecting to see major jobs gains because of increased efficiency. Construction jobs would have been boosted if a major infrastructure bill had been passed.

Contact Nolan Rosenkrans at nrosenkrans@theblade.com, 419-724-6086, or on Twitter @NolanRosenkrans.