[IMGCAP(1)]PricewaterhouseCoopers’ latest Trendsetter Barometer—a quarterly survey of top executive officers at privately held U.S. businesses—has something positive in it for everyone, according to Ken Esch, the PwC Private Company Services partner who conducted the survey.
“From a labor perspective, there are some encouraging signs that employers intend to add to their workforce and are feeling pressure to increase wages,” he said. “For the overall economy, trendsetters expect growth in their own company and in the economy as a whole, so it’s a pretty positive report.”
The report, released this week by PwC, shows that 71 percent of privately held companies are upbeat about the U.S. economy over the next year. This is the most positive assessment since 2006, while 86 percent of private companies anticipate positive revenue growth over the year ahead, the highest number since 2007.
“One thing we watch closely on a quarterly basis is the statistics around employment, because we feel the employment component is the path out of recession,” said Esch. “We’ve experienced a very slow growth environment, in contrast to the recovery from other recessions. Often you get a quick snap back, but that just hasn’t happened with this recession.”
“Employers have been slow to add to their workforce, but this time we see in the survey that they are going to increase their headcount by an average of 2.6 percent,” he said. “That’s a big increase—it’s up from a 1.6 percent increase in the previous quarter.”
Esch noted a skills gap that affects current hiring conditions. “We’ve seen problems both in white collar jobs as well as the traditional blue collar jobs. There is a lack of qualified workers in the manufacturing environment.”
There are two reasons for this, according to Esch. “One of the factors contributing to this is the outsourcing of manufacturing jobs over the past 20 year. We just haven’t developed those skills,” he said. “Secondly, technology has redefined manufacturing processes. A different type of skill set is required to operate in today’s manufacturing floor. And there’s always a demand for people with ability in engineering, technology, the sciences, and sales and marketing.”
Among the survey’s findings:
Six out of seven private companies expect positive revenue growth in 2015—the most optimistic assessment since mid-2007.
Improved gross margins are reported by 31 percent of private companies, the highest in over a decade.
Private companies are projecting growth of 8.9 percent in the coming year, and estimating growth of 5.4 percent for their respective industries overall.
Even with good credit availability and low interest rates, private companies are being judicious in their investments. They’re generally not entering into bidding wars with larger private equity players and big strategic alliances.
There are few impediments to growth, as only half of private companies cite lack of demand as a headwind in the past two quarters—the lowest level since 2005, followed by concerns over the skills gap.
“We’ve seen that private companies are generally more optimistic than their public counterparts,” said Esch. “Their agility in responding quickly to customers’ changing demands, coupled with the ability to make long-term investments and weather short-term economic downturns, has generally led to stronger performance and higher growth.”
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