Community Development News
2014 Economic Outlook
Chamber conducts business climate survey to "take the temperature" of our membership
Published: Monday, February 10, 2014 8:00 am
By: Mark Mehmert
Periodically, the Chamber surveys its members about their opinion of the local, state and national economies and the direction in which they perceive them to be headed. We also ask about members’ plans and expectations for the future.
This survey was conducted in an attempt to "take the temperature" of our membership, and observe how their responses change over time. Please note that the total of all categories may not add up to 100% due to some respondents choosing to skip certain questions.
Although Chamber members span many industries, most members are small in employment terms. As a result, the vast majority of respondents fit the "small business" moniker very well. In fact, 81% of the respondents to the survey had an employment level of 49 or less.
Most respondents (64%) also indicated they had been in business for 20 years or more. Approximately 12% said they had been in business for 5 or fewer years and the remainder (about 24%) had fit between those two.
Figure 1 indicates how members responded when asked about how their employment levels compared to 2012. Members were asked the same question in 2008, looking forward to 2009.
The responses indicate significantly more optimism about 2014, with 29% of those surveyed anticipated adding to their employment in 2014.
This compares favorably to what members were expecting in 2009, with only 16% anticipating adding to employment during that time. The largest block of respondents in both time periods thought their employment levels would remain stable, and posted identical totals of 54%.
Respondents were significantly more optimistic about hiring in 2014, with only 11% anticipating a lessening of their employment base. In 2009, 28% believed they would be a smaller company in the coming year.
Members were also asked about their sales expectations. In 2009, 14% expected sales to increase 20% or more. In 2014, only 7% believe sales will increase that much. The movement toward a more modest expectation of sales growth is probably a reflection of the recent experience of respondents.
15% of respondents in 2009 thought sales would increase between 5% and 20%. In 2014, respondents are again more optimistic, with more than twice as many--35%--expecting a similar sales increase.
Just 5% in 2009 thought sales would increase less than 5%, compared to 21% in 2014. Similar to the employment expectations, both the 2009 and 2014 expectations for stable sales were very close.
Cumulatively, only 34% of respondents thought sales would increase in 2009, whereas 64% forecast an increase in sales in 2014. 40% anticipated a decrease in sales in 2009, while only 11% believe this will be the case for 2014.
Next, members were asked to rate six factors important to economic development. Fewer respondents rated the area’s Quality of Life as “Excellent” or “Above Average” than in 2009, with more describing the area as “Average”.
How respondents perceived the “Education Systems” item also slipped. The “Excellent” and Above Average” categories declined in share, while the “Average” category gained share. Interestingly, the “Below Average” category also lost share in 2014.
Health Care Systems was rated just one percentage point lower than in 2009 in the “Excellent” category. “Above Average” was the same, but the “Average” category gained at the expense of the “Below Average” and “Poor” categories.
Economic Climate and Business Environment took a significant hit when comparing the two surveys. Substantially more of the respondents downgraded the item to “Average” or “Below Average”.
When asked to rate Ease of Transportation, this item also declined in respondents minds. A larger percentage of those who took the survey saw this item in a different light than in 2009. The “Average” category gained significant share from both the “Below Average” and “Above Average” categories.
When asked to rate the Availability of Qualified Workforce, the respondents again shifted support to the “Average” and “Below Average” categories. Interestingly, the “Poor” category also lost share.
Overall, respondents seemed more likely to move the rating of items to the “Average” category, which gained share in every rated item.
One likely reason for the overall drop is the challenges to the area’s largest employer, state government. In the survey period, state government shrunk in employment terms and state employee compensation has been largely frozen. These factors have had negative consequences to the local economy, especially to small local businesses who are respondents to this survey.
The overall ratings downgrade is puzzling in light of the much more positive outlook of respondents when queried about both adding employees and sales/gross income expectations.
Another factor in the ratings response may be the long, exhausting climb local businesses have experienced over the past few years. Growth has been difficult to come by, and the stress of a tight economy likely affects local businesses’ psyche and the prism through which respondents see the local area.
We hope this information is helpful to our members and readers. We believe these surveys are important because they give us a “snapshot” in time of our members’ thoughts and plans for the coming year, and we appreciate the respondents’ participation.