Company News

March 2022 State of Business Survey: Business optimism is up despite increased hiring and inflation challenges

Liz Wilke Principal Economist, Gusto 

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

Source: Gusto survey data.

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

Source: Gusto survey data.

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.

Liz Wilke
Liz Wilke Liz Wilke is a Principal Economist at Gusto, researching the state of work and business in the modern economy. She is a veteran of both the technology and government sectors, where she directed research programs and public spending that supports dynamic, resilient companies and workers across the globe. Liz currently lives in Washington, D.C.
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