Overall, businesses are facing some headwinds due to larger economic forces, but 2022 so far appears hopeful for many businesses, who are optimistic enough about the future to plan some sizeable investments in facilities, equipment, and people.
Employers are optimistic
Four in five employers this month have “somewhat” or “very” good expectations about the economy in the coming three months. And that confidence is showing up in their near-term plans. Over half (54%) of employers in this month’s survey expected to hire additional employees in the next three months, and 26% expected to make capital investments in new facilities or equipment.
Figure 1: Businesses intend to hire and make capital investments in the coming months
Businesses with planned investments appear optimistic about their prospects, with over 40% of businesses who expect to make investments planning for investments of more than $25,000 in the coming three months. Only three percent of companies intended to downsize, and the majority of those (80%) intended to downsize modestly, by 10% or less.
Most companies are still having hiring troubles
Seventy-seven percent of companies this month said hiring was still “somewhat” or “very” difficult. About 25% reported raising pay to attract more workers. About 17% are offering more flexibility, and about 13% and 9% are offering new benefits or expanding their current benefit offerings, respectively. Though quits are down from their historic highs last year, the labor market remains tight, with still only 0.6 unemployed persons per job opening. Expect employers to continue to get creative with ways to attract and retain talent in the coming months.
Inflation further squeezes businesses
Seventy-two percent of businesses indicated worry about inflation. Responding to inflationary pressures, 43% of businesses have increased prices, and 38% are absorbing some or all of the cost of increased inputs, which is eating away their profit margins. One in 10 businesses has reduced their offerings to limit their exposure to input price fluctuations, and 1 in 20 businesses has limited their hours to reduce costs.
Figure 2: Inflation is impacting businesses’ bottom line
Impacts of the war in Ukraine
This month we asked whether businesses thought the war in Ukraine would have reverberation effects on their business. The majority (72%) said “none” to “a little.” About 1 in 5, however, indicated they expected a moderate impact.