Pennsylvania’s small business owners are optimistic about the future, expecting increased sales without increasing prices, according to an economic outlook survey recently released by PNC Bank.
Highlights of the survey revealed 83 percent of business owners are optimistic about their company’s overall prospects while 70 percent, the most since 2007, are optimistic about the U.S. economy. In addition, 57 percent of owners expect sales to increase, and 51 percent anticipate profits to climb over the next six months.
PNC economist Kurt Rankin said what he found most surprising about the survey results is consumers are saving instead of spending.
“With six months of lower gas prices, we expected to see additional consumer spending but we’re not," Rankin recently told Pennsylvania Business Daily. "For now, consumers are banking the savings in case of another economic downturn."
While saving might look good on paper, Rankin said it is actually counterproductive because nothing stimulates the economy like consumer spending.
“We need workers to spend," Rankin said. "Without consumer spending, that means less job creation. Savings aren’t bad, but it does mean the economy will grow slower.”
The survey also found the manufacturing and transportation industries will benefit most.
“Manufacturing and transportation are among the highest paying industries,” Rankin said. "We’re also hearing businesses are having trouble finding quality employees, so businesses are willing to pay more to get employees. It’s a matter of supply and demand.”
On the downside, only 22 percent of the respondents said they plan to add full-time employees while 72 percent will keep staffing the same. Rankin attributed this to the relatively slow growth of the commonwealth’s economy.
“Pennsylvania is growing slower than the national average, but it is growing," Rankin said.
Business owners seem to accept the slow but steady growth.
"We’ll continue to expand and add jobs to the economy, but we’re not expecting any type of breakout or for the customer base to launch the state’s economy faster than the rest of the country," Rankin said.
Numbers back up that assertion. As of February, when the most recent data was released, the unemployment rate in Pennsylvania was 5.2 percent, compared to the national average of 5.5 percent.
Furthermore, Rankin said the commonwealth was fortunate in that it did not have to deal with housing bubbles or auto industry meltdowns, such as what led to Detroit’s bankruptcy.