Survey finds private companies feeling confident

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According to PwC US’s latest Trendsetter Barometer survey, business owners whose companies don’t trade stock publicly are feeling pretty confident – and have been for a while now.

This confidence is translating into plans for major capital spending projects and, more cautiously, hiring. Among the highlights of the report:

  • Nearly three in five private companies are confident about the U.S. economy, continuing their 18-month optimism streak.
  • More than one-third of them (36 percent) plan major new capital investments, the highest percentage in over two years.
  • The majority of private companies surveyed (56 percent) plan to increase headcount, but minimally, via targeted hiring.
  • Two-thirds of Trendsetter companies also plan to increase operating expenditures across a range of areas, including new products and geographic expansion.

The report found companies are not only willing to spend. They are willing to make some fairly substantial investments:

Executives told us they’ll put an average of 8.4 percent of their total sales
into capital projects, up from 6.4 percent projected a year ago. Only once
in the past several years have we seen so high a level of spending commitment (10 percent in 3Q13). Two-thirds of Trendsetter companies
also plan to increase operating expenditures across a range of  areas, including new products and geographic expansion.

As for headwinds, private-company leaders appear less worried about those than they’ve been in quite a while. One outlier is lack of qualified workers, flagged by nearly one-third (32 percent) of our respondents. The last time concern about finding skilled workers inched this high (or nearly so) was a year ago, when 30 percent of private companies cited it; the time before that was in 3Q08. Further evidence of a tightening labor market can be seen in apprehension about wage pressure, with 20 percent of Trendsetter executives citing this as a growth barrier – up seven points from 1Q14, after steadily declining for three consecutive quarters.

The optimism is not limited only to the outlook for the domestic economy. Among private companies that sell abroad, 92 percent believe that the world economy is either growing or staying the same. Only 8 percent of the companies describe the global economy as slowing. PwC says that’s the lowest percentage it has seen in years.

“During the economic downturn, we saw opportunistic companies invest strategically in capital projects to gain a competitive edge and spur faster growth,” Ken Esch, a partner in PwC’s Private Company Services practice said in a statement. “Now that the economy has stabilized, many of their peers are playing catch-up, investing in deferred maintenance, infrastructure upgrades, and emerging technologies to enhance their own growth.”

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Updated: August 5, 2014 — 10:38 am

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