Businesses Believe State's Economy Gaining Momentum
LANSING — While national business surveys show that a restrictive and uncertain business climate is limiting business growth and economic recovery nationally, many business owners in Michigan believe the state's recovery is gaining momentum, according to a recent survey of small- and mid-sized businesses. The survey showed across-the-board improvement regarding sales, profits, hiring and wages, with indications that further growth is expected in the coming months, with the strongest area of growth being in the Metro Detroit region. It appears the next big challenge for businesses in the developing recovery will be to help develop a highly skilled workforce, as the survey showed the lack of qualified workers in Michigan continues to be a growing concern for business owners.
These findings come from the semi-annual Michigan Future Business Index study, commissioned by Lansing-based Accident Fund Insurance Company of America and conducted by Marketing Resource Group, Inc. in May 2012. A total of 864 Michigan business owners, operators, officers and managers were interviewed for this survey.
This survey yielded some positive results despite the lingering sluggish economic conditions. The most promising sign noted in the survey was with regard to the level of dissatisfaction with economic conditions. Business owners who are now saying they are satisfied with the economy is at 43 percent, representing a 32-point jump in net satisfaction since October 2011. Additionally, 27 percent of businesses surveyed said they increased employee wages, a 12 percent improvement over the October 2011 survey when it was at 15 percent. Also a very positive sign, the percentage of businesses that have hired more employees has doubled since October 2011, with 22 percent of businesses saying they increased the number of employees in the past six months.
"These surveys continue to show increasing evidence that the business climate in Michigan is improving," Mike Britt, president of Accident Fund Insurance Company of America, said. "Our customer base is primarily composed of small- and mid-sized businesses, so we are happy to see Michigan businesses continue to grow and prosper. A healthy business climate in Michigan is good for everyone."
Other positive results from the survey include:
• Six-month business outlook. Over half (52 percent) of respondents said the business outlook for the next six months is good, with 16 percent saying it is "very good."
• Six-month "bottom line" expectations. Forty-four percent of business owners said they expect sales to increase in the next six months, a five percent increase from October 2011. Thirty-four percent of respondents said they believe their bottom line will improve, compared to 24 percent last October.
• Hiring and layoffs. There has been a significant increase in respondents who say they plan to hire more employees in the next six months, now at 25 percent, up from 15 percent in October 2011. The percentage of those who said they will not hire more employees has dropped from 80 percent to 68 percent. The outlook for increased wages is also improving, with 24 percent of respondents indicating they plan to increase wages for their employees within the next six months, up 18 percent from October 2011. Regionally, the outlook for new hires is strongest in the Saginaw/Flint/Bay City region (31%); the Detroit Metro region (30%); and the West Michigan region (28%).
"The results of this latest Future Business Index survey are definitely encouraging," Chris Holman, CEO of the Michigan Business Network and publisher of the Greater Lansing Business Monthly, said. "Many small- to medium-sized businesses across the state are saying they are seeing the positive signs needed to rekindle their optimism in Michigan's economy. The continued investment in their businesses and their increases in hiring are a testament to their resiliency and commitment to improve Michigan's business climate."
To view a summary of the most recent FBI survey, please visit the Accident Fund Insurance Company of America website at www.accidentfund.com or the Michigan Business Network website at www.michiganbusinessnetwork.com/.