Businesses are expecting a good year ahead, according to Employer Associations of America, which just released its annual National Business Trends Survey.
The survey asks business executives to respond to business trend questions in the areas of business outlook, business investment plans, staffing levels, hiring plans, job creation barriers, pay strategies and cost-cutting measures.
The 2014 survey found that, overall, business executives are optimistic about the upcoming year, with several responding that they expect to award pay increases and plan to increase training budgets.
“When asked to compare the 2013 business outlook to 2012, 90 percent of the executives surveyed reported that 2013 was about the same or better than 2012,” the EAA reported. “This is up from the 79 percent who had projected 2013 would be the same or better at this time last year.
“This optimism remains strong for the new year, as 90 percent of survey respondents expect the overall 2014 economic outlook to be about the same or better in comparison to 2013.”
Additionally, the EAA said 71 percent of business executives expect increases in their sales/revenue in 2014.
While the horizon looks good nationally, Michigan businesses may experience an even better year according to Maggie McPhee, director of information servicesat The Employers’ Association.
“They are a little higher, a little more optimistic,” McPhee said in regard to the survey results coming specifically from Michigan companies. “I think that is because we are coming from so far behind compared to the rest of the country.
“Businesses are planning to award pay increases — more of them are planning to do that. Pay raises and increased training budgets in Michigan are bigger than they are in the rest of the nation.”
McPhee pointed out that 54 percent of the Michigan companies surveyed said 2013 was a good year. These companies also were slightly more optimistic than the rest of the nation about 2014.
Like the rest of the nation, Michigan businesses are expecting to see an increase in hiring this year: 55 percent versus 47 percent nationwide.
“As far as compensation and things like that, pretty much all of the increases in wages and salaries are going to be about the same,” McPhee said. “There may be more of them, but the amount is not that different.”
National results indicated that in 2014, 74 percent of the respondents plan to award wage/salary increases — up from 66 percent in 2013. Forty percent plan to award variable/bonus awards, and 11 percent will give lump sum awards during the year.
The EAA reported that only 10 percent of the organizations surveyed plan to freeze or reduce pay for 2014, which is optimistic given that last year 19 percent of businesses reported freezing or reducing pay to cut costs.
“The biggest area of investment in Michigan will be in technology and equipment, and probably training. Training is really going to be big in Michigan,” McPhee said.
She said the training would be focused on the professional and skilled trades.
“I think the professional level is because we are going to be doing more hiring so you have to train the supervisors, managers and the professionals,” McPhee explained. “The skilled trades have been an issue for several years, and I think that more and more manufacturing companies are starting up their own in-house training programs so they are pouring the dollars into that. In conjunction, they are working with the community colleges and work-force development programs.”
Nationally, 37 percent of executives said they plan to continue increasing their 2014 training budgets, which is a 16 percent increase from the percentage reported for 2013.
Of course, challenges remain, both for Michigan and the nation.
“As far as challenges that they are still facing in 2014, basically they are the same for the nation as they are for Michigan, but the two biggest concerns are economic constraints and government regulations,” McPhee said.
In the national survey, businesses ranked the ability to pay for benefits (26 percent), competition (31 percent), cost of regulatory compliance (26 percent), skilled labor shortage (22 percent) and the ability to pay competitively (17 percent) as their top challenges in the short term.
Employers are asked to fill out the annual survey every October. This year 1,740 organizations, covering all 50 states, responded. Michigan-based companies accounted for 15 percent of the respondents; 45 percent of the responses were from Midwest-based companies.