Private-company CEOs' optimism as they enter 2014 is fueling growth and hiring plans for the year ahead, according to PwC US's latest Private Company Trendsetter Barometer, which found 43 percent of the leaders of private companies surveyed signaling confidence in the world economy, the highest level since the first quarter of 2011.
The survey also found the CEOs projecting 8.5 percent growth for the next 12 months, up from 7 percent a year earlier (fourth quarter 2012) and outpacing forecasts for U.S. GDP growth, which is expected to be roughly 3 percent for 2014.
While 51 percent of the survey respondents remained uncertain about the world economy, their ambivalence does not appear to be deterring business activity. Private companies believe markets are strong enough to support their corporate agendas, both in the U.S. and abroad, according to Trendsetter Barometer. Nearly one-third of respondents are planning major new capital investments in 2014, while nearly one in five are looking to acquire new businesses, compared with just 11 percent a year ago.
"The optimism expressed by private-company CEOs at the end of 2013 for the year ahead is an encouraging sign that our economy continues to strengthen, especially compared with this time a year ago," said Ken Esch, a partner in PwC's Private Company Services practice, in a statement.
Rich Stovsky, leader of PwC US's Private Company Services practice added, "We see that our clients are looking past economic and legislative uncertainty to move ahead with critical decisions, such as making new capital investments and expanding their businesses. Clearly, private-company leaders recognize that the external environment needn't stall plans indefinitely, and so we encourage companies to keep considering a range of actions they might take to fuel sustained, long-term growth."
In addition, 57 percent of private companies plan to hire workers in 2014, according to the CEOs surveyed by PwC. Only 45 percent of the survey respondents said they are operating at full capacity, a situation that could be improved by bringing the right workers on board. Private companies indicated they aim to increase their composite average workforce by 1.9 percent, as well as pay their employees more this year, predicting a median hourly wage increase of 2.7 percent over the next 12 months.
Despite demand and planned wage increases, qualified workers have remained hard to find, with over one-quarter of private companies citing this as a barrier to growth. People with technology and engineering skills are in particularly high demand, as companies look to invest in innovation and do more with less. More service companies than product companies (35 percent vs. 24 percent) cite the need for technology aptitude, although the latter companies—including manufacturers—increasingly cite the need for workers with STEM abilities. Nearly one-quarter of the product companies surveyed said they need blue collar workers possessing specialized skills.
"Businesses are at an important inflection point with their workforce, particularly in specialized sectors like manufacturing," said Esch. "They are losing knowledge and skills when older workers move on, while simultaneously requiring specialized skills from the workers who replace them. Although the talent gap is not a new issue, it may become increasingly problematic for private companies—and society at large—if they don't find creative ways of addressing the challenge."