Small Biz Watch: Costly energy crimps outlook
Higher energy prices are proving to be a bit of a downer for small and midsize businesses across the country, according to a survey of nearly 1,100 business owners and executives conducted by PNC Financial Services Group from late August through early September.
Higher energy prices were ranked by 40 percent of respondents as the issue that would have the greatest negative impact on company performance. Next worrisome were further interest rate increases (21 percent) and the cost of health insurance (18 percent). Last spring, by comparison, rising interest rates (26 percent) were the top concern, followed by health insurance (24 percent) and then energy prices (18 percent).
As a result, small-business owners have toned down their expectations for growth and profitability.
"Overall, the outlook for their own companies has moderated a bit since the spring, which may have been the high point," says Stuart Hoffman, chief economist at PNC. "They're not pessimistic, just a bit more cautious."
Indeed, 63 percent expect sales increases over the next six months (down 7 percent from spring), 54 expect profit increases (down 5 percent from spring), and 29 expect to increase hiring (down 5 percent from the spring). One piece of good news on the inflation front is that slightly fewer owners–46 percent now vs. 50 percent then–expect to raise prices over the next few months, despite higher energy costs.
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