U.S. small and mid-sized business owners are holding back on hiring and spending despite growing optimism over the economy, according to the latest findings of the PNC Economic Outlook survey.
Almost six in 10 (58%) are optimistic about the U.S. economy during the next six months, up from 42% last fall when the survey was last conducted. Small business owners are even more optimistic about their local economies, with 71% optimistic, an improvement from 59% six months ago.
About one in four are highly optimistic about their companys prospects during the next six months and nearly half expect sales to increase, relatively unchanged from the last survey.
The powerful engine of the U.S. economy is not firing on all cylinders, but there are sparks of optimism related to sales, profits and housing prices, Stuart Hoffman, PNCs chief economist, said in a statement.
Despite the growing optimism, most businesses are planning to hold off hiring, with three in four maintaining current staffing levels for the next six months. More than half (58%) plan to spend on capital investments, the same as in the fall but down from 70% a year ago. Only 18% plan to take out a new loan or line of credit.
The findings are consistent with Deloittes quarterly survey of chief financial officers of North Americas largest companies. While CFOs were generally more optimistic about the economy, they too planned to hold back on hiring, with 27% expecting hiring cuts, the Deloitte survey found.
Both North American CFOs and small and medium-sized business owners were concerned about the continued uncertainty over federal spending, tax and deficit actions. Small business owners were also concerned about continued limits on U.S. exports to Europe, according to the PNC survey.
The PNC survey polled 1,718 owners or senior decision-makers of small and mid-sized businesses with annual revenues of $100,000 to $250 million. The survey was conducted between January 23 February 15, 2013.