2025 Small and Mid-Sized Business Optimism Hits Highest Level in 21 Years - Latest Survey Insights
Discover why small and mid-sized business owners are more optimistic than ever in 2025 despite recession fears, hiring challenges, and rising costs, based on PNC's recent survey.
Small and mid-sized business owners are demonstrating unprecedented optimism about sales, profits, and demand, reaching a 21-year peak according to PNC's latest semi-annual survey. This positive outlook persists even amid widespread economic concerns about a potential recession in early 2024.
Key Highlights
- 77% of business owners feel optimistic about their company’s future, a significant increase from previous years.
- 35% report difficulties in hiring qualified employees over the last six months.
Business Confidence Soars
Despite looming recession predictions, confidence among business owners has surged, with 77% expressing strong optimism compared to 49% a year ago and 60% in the spring. Nearly two-thirds (65%) attribute their positive outlook to confidence in their management capabilities.
PNC Chief Economist Gus Faucher credits this optimism to the resilience business owners have shown since the pandemic, enabling them to focus on controllable factors rather than external uncertainties.
Ongoing Hiring Challenges
Although only 9% plan to expand their workforce, 35% have found it challenging to hire qualified candidates recently. Obstacles include a shortage of applicants (50%), lack of experience or skills (22%), high salary or benefit expectations (14%), and legal or security compliance issues (6%).
To attract and retain talent, many employers are adopting flexible work arrangements, updating benefits, and standardizing hiring and compensation policies.
Compensation increases are expected by 33% of owners, up from 24% in spring but below last fall’s 40%. Additionally, 43% observe rising compensation demands, and 38% note increased needs for flexible hours or remote work options.
Cost Concerns Take Center Stage
While supply chain issues were the top concern six months ago, now 23% of businesses worry about material costs (up from 9%), and 14% about labor costs (up from 4%). Concerns about supply chain disruptions have declined to 10% from 25% last year.
Interest rate hikes by the Federal Reserve also weigh on business owners, with 65% expecting impacts over the next year, and 31% anticipating pressure on profits.
Despite these challenges, 55% plan to raise prices in the next six months, consistent with last spring but less than the 63% a year ago. Price increases are driven by favorable market conditions (38%), rising labor costs (32%), and climbing non-labor expenses (29%).
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