Author: Joshua Levy
Since October 2021 we’ve been surveying businesses across the state monthly through our NC Business Pulse Survey. Here are some trends we’ve noticed over the past several months:
Staffing levels are still a top concern but conditions may be improving
Adequate staffing levels have been a top concern of employers since the survey began, although some moderation may have occurred. For the first year of the survey 60 to 70 percent of businesses said this was a current concern, but in recent months this percentage has fallen to 50 to 60 percent of employers. What’s more, the percentage of employers who say it will be harder to find qualified workers in 6 months has fallen from 60 percent when the survey began to about one-quarter of businesses in recent months. It’s not clear whether hiring has gotten easier or employers have just adjusted to persistently tight labor markets. When asked about finding qualified workers in 6 months from now, about ¼ of employers expect this to be harder than it currently is, although this percentage has been steadily decreasing from a high of 50% at the survey’s inception. Only about 7% think it will be easier to find qualified workers, suggesting that most employers may have resigned themselves to tight labor markets for the near future.
Most businesses are meeting their revenue goals although more are reporting missing goals
For most of the survey, about half of businesses said they had met their revenue goals for the past month, with another 20 percent saying they had exceeded their goals and about 30 percent failing to meet their goals. Over the past several months, however, the percentage failing to meet revenue goals has climbed closer to 40 percent, while those exceeding their goals has fallen closer to 10 percent. We’ll be watching to see if this signals an overall deterioration in business conditions going forward.
Fewer businesses are seeking capital on a monthly basis but few are reporting difficulty obtaining it
Overall, it seems that fewer businesses are seeking capital than when the survey began, from about half of employers in October 2021 to about 30 percent in May 2023. The good news is that fewer are having difficulty accessing needed capital, down from 20 percent down to less than 10 percent. Another 20 percent reported accessing capital with no difficulty. The fact that fewer businesses are seeking capital in recent months may be attributable to the Federal Reserve raising interest rates since March of 2022, leading to higher borrowing costs for employers. As the Fed pauses or moderates its rate hikes going forward, it will be interesting to see how this impacts our survey respondents.
Remote and hybrid work has been relatively stable over the course of the survey
For the first 6 months of the survey, employers estimated their workers worked about 25% of their time remotely. Since then, that percentage has come down to about 15% and has remained at that level for the past year. The distribution of companies by how much remote work has also been consistent—about half do no remote work at all, about 1/3 do a little (less than 25% of their time) and much smaller percentages work between 26% to 99% remotely. Only about 7% of companies report working 100% remotely. The fact that these percentages have been so stable over the past year suggest that most respondents have settled into their current level of remote work. This conclusion is supported by another survey question that asks employers about their future plans for remote work—in May, 96% said they planned to stay the same, with only 3% planning to decrease and 1% planning to increase remote work over the next 6 months.
Plans to increase wages have become less common recently
In addition to asking about remote work, the survey also asked about planned changes over the next six months in wages, benefits, training and investments in technology. Most of these have remained stable over the course of the survey, with a slight decline in plans to increase wages over the past few months from over 40% to 29% in May. This may reflect employers experiencing a moderation in overall inflation, which has slowed in recent months. It may also reflect the fact that that wages have already risen significantly over the course of the survey and may be levelling off. We’ll also be watching to see if this signals a softening in the demand for workers going forward.
Planned Changes in Wages over the Next 6 Months
Slight dip in optimism, but businesses still relatively upbeat (or maybe more resigned)
One of the most stable responses in the survey has been the rating of employers’ current state of their business, which has hovered around 7 out of 10 since the survey began. The survey also asks businesses whether they anticipate business conditions will improve or decline over the next 6 months. The last few months have seen a dip in those who think conditions will improve from 37% in January to 27% in May of this year. Those expecting conditions to decline have remained at about 20% in recent months. It may be simply that employers have adjusted to current conditions and expect things to remain about the same.
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