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It’s not just uplifting weather–small and mid-sized businesses here have a brighter outlook this spring than they did last fall.
That’s according to the latest biannual business survey from PNC Financial Services Inc., as reported to local commerce and financial officials Wednesday morning at Cape Fear Community College.
“What we have is good news,” PNC economist Mekael Teshome told them, first noting that business optimism was on the sad side in the latter part of 2013.
At the time, just 56 percent of business owners surveyed in North Carolina said they were optimistic about their local economy; the same went for the national economy as tumultuous Capitol dramas like the debt ceiling and government shutdown caused political faiths to bottom out.
“That’s pretty bad,” Teshome said of the business’ rating, “considering we’ve been four or five years into this economic recovery.”
But the latest survey showed broad improvement–64 percent of business respondents said they felt on the ups about the local situation.
That’s still a bit low, though, compared to other states.
“Business owners here seem to be a little more guarded about their local economic conditions,” said Teshome. He speculated that the local and state unemployment rates, which have been coming in higher than the national average, might be a contributor to the sentiment.
The local jobless rate is, however, considerably improved. The tri-county figure was 7.7 percent in January (the latest data available). It was 11.1 percent a year prior.
Teshome said the Wilmington area has advantages that will allow it to post faster job growth than average. They include a relatively low cost for doing business.
Citing an index from Moody’s Analytics that examines the costs of taxes, energy, real estate, labor and other business factors, he said Wilmington is about 20 percent more affordable than the national average.
“That’s an aspect that can attract a lot of investment,” he said.
For the U.S., annual job growth is expected at about 1.6 percent or so, although most markets in the population-collecting south will be on a faster track, according to PNC.
In the Wilmington area, the expectation is beyond 2 percent.
The biggest local job dynamos over the past three years were the sectors of retail, leisure and hospitality–those two tying right into tourism–professional services, and education and healthcare.
Teshome expects that pattern to hold over the next three years.
“Private sector job growth, especially among small businesses that do the lion’s share of hiring, is essential to sustaining the U.S. economic expansion,” said the PNC report.
In October 2013, UNCW’s senior economist projected that New Hanover, Brunswick and Pender counties would see 2.5 percent economic growth in 2014. Dr. Woody Hall, who has been a professor of economics at the university since 1974, said a 3 percent growth rate is what’s really needed to keep the area’s jobless rate stable.
An economic update Hall’s office put out in February noted unemployment rates in the Wilmington metro area have been on the downward trend since the third quarter of 2011, but recent rates are still more than double what they were in 2007, just ahead of the Great Recession.
Another aspect of business optimism Teshome highlighted Wednesday was compensation, and what change small to mid-sized businesses have in mind over the next six months.
Nineteen percent of North Carolina business owners reported they expected to increase employees’ wages or compensations. Nationally, that number was much higher–32 percent.
“Overall, again, an improvement in sentiment, but more of a cautionary attitude of ‘Let’s not spend as much money, because we don’t know what’s right around the corner. We could hit another speed bump,’” Teshome summarized. “We’re not forecasting it, but that’s what we’re hearing from a lot of our respondents.”