Spring Economic Outlook Survey

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Squeezed by Inflation, Small Business Owners Expect to raise Prices, Supply Chain Disruptions To Ease, PNC Survey Shows

Business owners were surveyed during January, before events in Ukraine unfolded

Supply chain issues top the list of concerns for small business owners over the last six months but they see those pressures easing by mid-year. In the meantime, inflation pressures are expected to continue to impact these business owners, with a majority planning to further raise their own prices in the near term, according to the latest PNC semi-annual Economic Outlook survey of small and mid-size business owners and executives, which concluded Feb. 3.

KEY SURVEY FINDINGS:

Supply Chain Worries: In January, a third (34%) of owners who rely on a supply chain said timeliness had worsened in the previous six months. Concern about supply chain disruptions was highest in the manufacturing (56%), wholesale/retail (51%) and construction (38%) sectors. More than a quarter (28%) of businesses that rely on inventory are faced with the challenge of not having enough supply to meet expected demand. However, six in 10 (57%) expect the timeliness of their supply chain issues to improve in the next six months.

Inflation Pressures Ramping Up: Rising prices also are on the minds of business owners. Half (51%) of businesses expect to increase the prices they charge in the next six months, with 36% expecting hikes of 5% or more. Nearly two in 10 (16%) of those expecting to increase prices plan to raise them by at least 10%, more than double those respondents who anticipated a similar move last fall (6%). One in three (34%) say their prices already have gone up in the past six months, with four in 10 hiking them by 5% or more. Among the 51% expecting to increase their prices, nearly two-thirds (63%) are doing so because they are attempting to keep up with rising non-labor costs, a significant increase compared with 33% in the fall. 

Worker Turnover, Hiring Impact: More than four in 10 (43%) business owners report losing staff since the start of the pandemic and 85% of those say this has had a negative impact on their business Top reasons employers provide for employee departures are illness or death (50%), worker concerns over health or safety (46%), and changes in lifestyle or priorities (36%). Three in 10 (31%) say workers have shifted their profession either by moving to other industries or types of work (24%) or through self-employment/gig work or starting their own business (12%). Other reasons cited for departures include lack of childcare or eldercare options (23%) and refusal to comply with COVID-19 vaccine or testing requirements (21%).

 

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