LANSING — The latest Michigan Future Business Index survey of small and midsize business leaders shows unequalled confidence in the state’s business economy and a rekindled desire to reinvest in their own future.
Business owners said they have seen added growth in their businesses over the past six months and now plan to make investments in their workforce through increased wages and training.
“The Michigan Future Business Index surveys continue to show increasing evidence that Michigan’s business climate is improving,” said Mike Britt, president of Accident Fund Insurance Co. of America, which sponsors the survey. “Accident Fund’s customer base is primarily comprised of small- and mid-size businesses, so we are happy to see Michigan businesses continue to grow and prosper. A healthy business climate in Michigan is good for everyone.”
The previous Michigan Future Business Index survey, conducted in October 2012, showed indications of moderated optimism among businesses that had been incrementally building since 2010. The survey pointed to setbacks in the national economy, the fear of the then-looming fiscal cliff, and the uncertainty of the then-unrealized presidential election as reasons for the pullback. With most of those concerns now in the rearview mirror, optimism appears to have picked up again.
With expanded reports of growing sales and profits — coupled with continued exuberance for new product and service launches — businesses are planning for future growth. Most see their workforce as their biggest asset and plan to increase wages and educational and training opportunities. Employers cite growing challenges to finding qualified talent to fill open positions.
While the challenges of dealing with new government regulations and implementation of the Affordable Care Act remain, most say they will continue to offer benefits to workers, albeit requiring more out-of-pocket employee contributions.
After a short stall in positive momentum in October of 2012, the June 2013 survey shows small business employers have renewed their enthusiasm toward the state economy in a big way.
Satisfaction with the state economy has rocketed 13 points to 54 percent since October 2012, while dissatisfaction has plummeted to 44 percent. This marks the first time business leader satisfaction with the direction of the economy has reached a majority since the Michigan Future Business Index survey began in 2006.
The percentage of businesses with new hires is now the highest it has been since the survey started with 25 percent now saying they have hired more employees over the past six months, up four points since October 2012. New hiring is the strongest in Metro Detroit (27 percent) and the Lansing region (26 percent).
There is also a significant increase in hiring among businesses with more than 20 employees (37 percent); those with revenues of $5 million or more (40 percent); and within the real estate, finance and insurance industries (35 percent).
Also a positive sign, 41 percent of business owners reported in the latest MFBI survey that sales have increased over the previous six months, a one-point increase from the October 2012 survey. Sixty-one percent in the real estate, finance and insurance industries say sales have increased and that is a jump of 21 percent since October.
Other positive results from the survey include:
Six-month business outlook. Sixty-four percent (an increase of 12 percent over October) say their outlook for business over the next six months is good, with 22 percent (and increase of five percent) saying “very good.” Fifty percent of respondents say they expect sales to increase in the next six months (an eight percent increase over October 2012) and 40 percent now say they expect their profits to increase in the next six months (up eight points from October).
Hiring and layoffs. Thirty percent of respondents say they plan to hire more employees in the next six months. This is a six percent increase over October 2012 and a 14-point increase since June 2011. The outlook for new hires remains strongest in the Detroit Metro region (34 percent). New startup businesses (37 percent) and those with five employees or more are most likely to be hiring. The specific sectors most likely to hire are financial, insurance and real estate (37 percent) and manufacturing and construction (36 percent).
Increased wages. The outlook for increased wages continues to improve, as 28 percent of respondents say they plan to increase wages for their employees over the next six months – up two points from October 2012 and up eight points from June 2011. Employers in West Michigan are still most likely to increase wages for workers, with 32 percent indicating they will do so. Additionally, wages are most likely to climb within the manufacturing and construction (32 percent) and financial, insurance and real estate sectors (31 percent).
The Michigan Future Business Index, commissioned by Accident Fund and the Michigan Business Network, is conducted semi-annually by Lansing-based Marketing Resource Group Inc. The survey has been conducted since 2006. A total of 1,015 Michigan business owners, operators, officers and managers were interviewed for the October 2012 survey.
To view a summary of the most recent Michigan Future Business Index, please visit the Accident Fund Insurance Co. of America website at www.accidentfund.com, or the Michigan Business Network website at www.michiganbusinessnetwork.com, or the Marketing Resource Group, Inc. website at www.mrgmi.com.