Fall Economic Outlook Survey

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Small Business Optimism Hits Record High, Gaining Momentum From Vaccines and Adapted Pandemic Operations, PNC Survey Shows

Business owners are feeling optimistic about the near-term future of their businesses amid increasing vaccination rates, and those who report that more than three-quarters of their workforce has been vaccinated are the most positive about their business outlook. This includes expectations for higher demand, sales and profits than companies reporting a lower rate of employee vaccination, according to PNC’s semi-annual national small business survey, which concluded Aug. 31.


Vaccines are top-of-mind: Eight in 10 (79%) businesses said they have taken action to encourage employee vaccination. Nearly half (48%) are requiring employee vaccinations, 44% are providing assistance related to vaccinations, 26% are incentivizing employees to receive vaccinations, and one in four (24%) have added restrictions for employees who choose not to be vaccinated. More than three-quarters (78%) of survey respondents estimate that a majority of their employees have been vaccinated and 43% believe their entire workforce is vaccinated. More than half (53%) of business leaders with fewer than 100 full-time employees have required their employees to receive the vaccine, more than double that of businesses with 100 or more full-time employees (26%).

Challenges remain: While more employers hope to hire – and hiring expectations have returned to pre-pandemic levels – many businesses are struggling to find employees. Among all employers surveyed, labor availability is the most frequently-mentioned concern, topping sales and supply chain worries that were reported as more prominent earlier in the year.  More than four in 10 employers say they are offering increased compensation to retain or attract new employees, implementing employee health or safety improvements (46%) and allowing more flexible work arrangements (44%).

Inflationary concerns: Inflation is now a greater concern as price hikes are expected to keep up with higher input and labor costs. More than half (54%) of business owners surveyed expect to increase their prices, and the anticipated hikes will be substantial, as more than a third expect to boost prices 5% or more, with favorable market conditions and higher costs cited as the leading factors.

Pricing Pressures:  Some of the pricing pressures are coming from anticipated supplier price increases: nearly half (46%) expect supplier price increases, little changed from spring (43%). Expectations for supplier price increases are higher among the manufacturing, wholesale/retail and construction sectors. These pricing dynamics have led to higher inflation expectations. Eight in ten respondents (80%) expect increased consumer prices this year, and most (62%) expect the rise to be 3% or more; 38% expect a jump of 5% or more, a survey high. 


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