May 13, 2014
Ohio’s small-business owners have a mostly dreary view of the economy in their communities.
U.S. Bank’s fifth-annual survey of small businesses with $10 million or less in annual revenue found that 69 percent of the owners in Ohio describe their local economy as fair or poor, up from 65 percent in 2013.
The survey also found that 43 percent of Ohio small-business owners say their local economy is the same as the national economy, while 39 percent say it is weaker, and just 14 percent say it is stronger.
The 14 percent figure is far weaker than a year ago, when 27 percent described the local economy as stronger than the national economy. This year’s drop was the biggest among the states where U.S. Bank operates.
In contrast, 57 percent of small-business owners in the 25 states where U.S. Bank provides small-business services say their local economy is fair or poor. That’s the best result in the five years of the survey.
The small-businesses owners in Ohio say high unemployment, low wages and taxes are reasons why they feel worse about the state’s economy.
Despite their feelings about their local economy, 68 percent of Ohio small-business owners describe their business as good, very good or excellent.
That’s about the same as the national number.
Other metrics such as hiring and capital investment also produce numbers that are similar between Ohio small-business owners and those in other states. The survey also found that 23 percent of small businesses in Ohio expect to hire over the next year, the best number in three years.
“Businesses are healthier. It’s just the sentiment is not as strong,” said Peter Lindahl, vice president in U.S. Bank’s enterprise-analytics group, which prepared the survey.
Jerry Archambault, regional small-business banking manager for U.S. Bank in central and northeastern Ohio, said small-business owners have worked to make their businesses more efficient and have strengthened their financial position.
“Many small-business owners in the state are hesitant to make big investments until they sense that the economic recovery is picking up its pace,” Archambault said. “Still, out in the field, we've been hearing that they’re ready to grow, and they continue to look for innovative ways to improve efficiency and boost their visibility in their community.”
The negative view in this year’s U.S. Bank results could just reflect how tough the economic recovery has been in parts of the state, said Mekael Teshome, an economist for PNC Bank, which conducts a similar survey twice a year.
“Business owners in Ohio tend to be conservative in terms of their expectations,” he said.
The most-recent PNC survey, from April, shows that more Ohio small-business owners than last year expect their profit and sales to rise in the coming months, but they remain reluctant to hire. They also tend to be more negative about the national economy.
“The economic recovery has been pretty weak,” Teshome said. “That cautious expectation is reflected in these surveys.”
The U.S. Bank survey identified health care as the top national issue for Ohio small-business owners in 2014, along with unemployment and the federal budget.