RESEARCH TRIANGLE PARK – Business executives’ optimism about the economy is cooling a bit heading into the third quarter of 2018 yet many companies are looking to hire additional employees immediately at the highest rate since the 2008 recession.
So reports the American Institute of CPAs in its new Economic Outlook Survey released early Thursday. The report and a similar one from Duke University are among the longest running and respected surveys, conducted quarterly to offer executives’ views about economic trends.
Even with the nation’s economy roaring at 4 percent Gross Domestic Product growth and unemployment under 4 percent in July and more jobs open than people to fill them, executives are worried about trade wars, tariffs and rising interest rates, the AICPA says.
“It’s unusual to see a decrease in U.S. economic optimism when key performance indicators such as profit and revenue are perceived to be on the rise,” said Arleen Thomas, a managing director at AICPA, which has a major operation in Durham.
“On the one hand, business executives are encouraged by the impact of federal tax reform and reduced regulation at home, but there is some concern about trade wars, interest rate hikes and other factors that could contribute to a global economic slowdown.”
Job seekers, however, have reason to smile.
Thirty-two percent of executives in the survey say they plan to add workers “immediately,” the highest percent since the recession a decade ago.
Also, 44 percent of executives say their firms have “too few employees.” Of those, 12 percent remain reluctant to hire. That’s a post-recession low, the AICPA said.
Yet jobs are going unfilled with executives citing “availability of skilled personnel” as their top concern. That’s the fifth straight quarter the skilled labor concern has worried executives the most.
Where are the jobs?
So what businesses are looking to hire? Here’s a look from the study based on firms’ revenue:
- “For employers with[more than] $1 billion in revenues, 47% have the right number of employees and only 8% have an excess number, leaving 42% with too few employees. Of those, only 14% remain hesitant, while 28% are planning to hire.
- “Of those in the $100 million to $1 billion category, 46% now say they have too few employees; 37% are hiring with only 9% being hesitant.
- “In the $10 – $100 million range, of the total of 45% with too few employees, 35% have plans to hire; only 10% are hesitant.
- “For employers with revenues [under] $10 million, again this quarter 52% say they have the right number, down from 61% in the first quarter; only 3% have an excess of employees; of the 40% having too few employees, 21% are planning to hire; while 19% are hesitant.”
Tariff worries
Trade war and tariffs worry many executives.
According to the survey, 49 percent of executives say tariffs and “tougher trade policies” by the US will be “unfavorable” to their businesses.
Only 4 percent see these changes as beneficial.
The remaining 44 percent see minimal or neutral impact.
Tougher rules and tariffs from US trading partners would affect 48 percent of firms negatively.
Executive suite optimism
Overall, executive optimism remained at 79 out of 100 in the AICPA index for the second straight quarter even though optimism about the US economy fell 4 points.
However, the percentage of executives who are optimistic about the economy’s performance dropped 5 percentage points from the second quarter and 10 points from the first three months of the year.
Optimism about their own firms fell a point to 69 percent.
“Both rates remain strong, however, from a historical perspective,” the AICPA noted.
Other indicators remain positive, neutral or decreased slightly.
“Organization optimism and expansion plans, along with revenue and profit and employment plans all improved slightly,” the survey reported.
“Spending plans for IT and other capital remained flat; training and development spending plans declined two points.”
The survey included information from more than 1,200 CEOs, chief financial officers, controllers and other CPAs.
