Wary Small-Business Owners Hold Off on Hiring: PNC

Three out of four small businesses said they expect their staffing to remain unchanged for the next six months.

Small- and midsized-business (SMB) owners in the United States plan to delay hiring new employees or seek new loans amid cautious optimism about the economy, which shows slow growth in the job market, according to the latest findings of the PNC Economic Outlook survey.

Three out of four (75 percent) small businesses said they expect their staffing to remain unchanged for the next six months. Nearly one out of three said they will choose to do more work with fewer employees. Only 41 percent think the federal government could take actions that would positively influence their hiring plans, most notably fewer business regulations.

Generally, their outlook has brightened about the U.S. economy during the next six months, as 58 percent are optimistic and 41 percent are pessimistic—a turnaround from fall's 42 percent and 57 percent. Regarding their local economies, 71 percent are optimistic and 28 percent are pessimistic—improved from 59 percent and 39 percent last fall.

"The powerful engine of the U.S. economy is not firing on all cylinders, but there are sparks of optimism related to sales, profits and housing prices," Stuart Hoffman, chief economist at PNC, said in a statement. "These findings support our baseline forecast that the moderate U.S. economic and jobs expansion will persist in 2013."

The spring findings of PNC's biannual survey, which began in 2003, revealed that about one in four are highly optimistic about their own company's prospects during the next six months, up from 23 percent last fall. Nearly half of SMBs surveyed said they expect sales to increase during the next six months—on par with the 46 percent from the previous survey.

However, just 18 percent said they would probably or definitely take out a new loan or line of credit, compared with 15 percent one year ago. More than half (58 percent) plan to spend money on capital investments, the same in the fall but down from 70 percent a year ago. Technology equipment remains the top priority, the survey results indicated.

One-third plan to raise their selling prices. and only 5 percent intend to cut their prices, signaling potential pricing pressures. Hoffman added that three factors are holding back the economy: Continued uncertainty about federal spending, tax and deficit actions; hiring freezes and ongoing layoffs, particularly at the federal level; and continued limits on U.S. exports to Europe.

Those looking to sell their small businesses have also seen general improvement in the market, according to a nationwide survey of business brokers conducted by BizBuySell, a Web-based marketplace for buying or selling small businesses.

Of the thousands of brokers surveyed, 75.2 percent of respondents said they are seeing the same amount of, or more, deals getting done, compared with the same time in 2012. When asked about the main factor causing the increase in business transactions this year, the top answer was an increase in the number of interested buyers (26.8 percent).