Business owners are less optimistic about NC recovery, report says
North Carolina employers are getting more pessimistic about the state’s economic recovery, leading to lower interest in hiring workers and pursuing loans for capital investments, according to a semiannual PNC Financial Services Group Inc. report timed for release Thursday.
The report focuses on small- and mid-sized businesses. The bank began a North Carolina-specific report in 2012 when it expanded into the state through buying RBC Bank.
About 42 percent of 151 N.C. survey participants said they were pessimistic about the state economy, up from 35 percent in the spring and 37 percent a year ago. About 15 percent were optimistic about the state economy, up from 12 percent in the spring and 9 percent a year ago.
Just 21 percent said they were optimistic about their own company’s economic path the next six months compared with 29 percent last spring, while 19 percent are pessimistic, compared with 15 percent last spring.
“ Many owners continue to report weak sales as their top challenges, but government regulation is a close second,” PNC economist Mekael Teshome said in the report.
The pessimism is projected to lead to a stagnant job market, with 8 percent of employers planning to add full-time staff and 8 percent planning to reduce their full-time workforce. “It suggests the labor market is improving, but lacks momentum,” Teshome said.
By comparison, the latest Manpower Inc. found 23 percent of employers in the Greensboro-High Point metropolitan statistical area plan to add jobs during the fourth quarter. About 6 percent of employers said they would cut jobs during the quarter. Manpower does not include the Winston-Salem MSA in its report.
Walter Cheek, president and owner of survey participant Excalibur Group of Clemmons, said he feels fortunate to have grown his business in recent years despite the sour economy. The company specializes in awards, trophies and customized customer apparel.
“ We’ve been able to expand and add an employee (to three) because of increased Internet sales and customer referrals,” Cheek said. “By providing higher quality goods, diversifying our customer base and keeping up our customer service, we’ve been able to ride out the economy.”
About 8 percent of employers indicated they would probably or definitely take out a new loan over the next six months, down from 15 percent in the spring survey and 11 percent a year ago.
In terms of profits, 32 percent project increased sales over the next months, while 17 percent project lower sales.
“ N.C. business owners frequently mentioned the major public-policy changes at the state level, and the controversy surrounding some of the new laws,” PNC spokesman Cynthia Montgomery said.
Sharon Decker, the state’s Commerce secretary, has expressed concern with how North Carolina’s reputation is being battered nationally because of intense in-state reaction to major policy changes. Those changes include reducing the number of weeks and weekly amount of unemployment benefits, the legislature’s declining to expand Medicare coverage, altering how abortions are conducted, and the voter ID laws.
Teshome said it is a “typical reaction, as big policy changes create uncertainty.”
He joined other economists in suggesting North Carolina is on a “two track” recovery, with Charlotte and the Triangle benefiting from the recovery, while other urban areas and rural North Carolina are trailing.
By Richard Craver/Winston-Salem Journal