With the presidential inauguration just days away, small-business owners are more optimistic about the economy than they were before the election, reported a new business economic outlook survey by M&T Bank released Tuesday.
About 40 percent of small businesses surveyed plan to hire additional workers or increase the hours of their current workforce in the next six months. Around the same percentage of businesses plan on increasing capital expenditures in the next six months, while 54 percent of respondents said they anticipate increasing wages by at least 2 percent in that time, the survey found.
Eric Feldstein, M&T Bank’s senior vice president and manager of business banking, described the sentiment among respondents as “cautious optimism.”
While some small-business owners are looking to expand, the survey showed that respondents are apprehensive about pending government regulations related to minimum wage laws and changes to the Fair Labor Standards Act with respect to overtime regulations. In November, a federal judge in Texas blocked the updated rule, leaving businesses in a holding pattern until the incoming administration determines its fate.
Two out of every five businesses said they might be forced to consider a reduction in workforce or capital investments in response to increases to the minimum wage or new overtime standards.
The biggest challenge identified by respondents was the cost of health care and benefits. Furthermore, about 75 percent said they were having trouble finding qualified applicants for open positions.
The survey saw a notable shift in businesses’ economic outlook following the presidential election. Before the election, 31 percent of respondents expected the economy to deteriorate in the next six months, compared to 25 percent of respondents who believed it would improve. However, after the election, 60 percent said they anticipate the economy will improve, while 13 percent said they expect it to decline in the next six months.
M&T decided to conduct this survey in response to conversations the bank was having with small business clients. The bank wanted to take that feedback and create a survey that the bank could use and share, Feldstein said.
The bank conducted the digital survey in November. The people surveyed were owners of small businesses with annual sales under $10 million located in Maryland, Virginia, Pennsylvania, Delaware, New Jersey and New York, covering M&T’s geographic footprint. About 300 people responded to the survey, half before the presidential election and half after.
M&T is the No. 1 Small Business Administration lender in the greater Baltimore and Washington regions, Feldstein said.
“We feel very comfortable that it provides a good representation of M&T’s client base,” he said.
M&T is still deciding whether it will conduct the small-business survey every six months or on an annual basis, Feldstein said. The bank also does separate surveys of large and mid-sized companies and commercial real estate businesses.