Trendsetter Barometer® business outlook: Q1 2019 top findings

Privately-held US companies remain upbeat on US economy in 2019.

Executives in US privately-held companies are not changing their views on prospects for still-robust US economic growth in 2019, according to PwC’s Trendsetter Barometer first-quarter findings. Concerns instead are intensifying around the health of the global economy, where sentiment has turned negative, and over gridlock in Washington D.C. on issues that factor in the success of their business, a blueprint for trade relations, immigration reform and US infrastructure development, according to a number of comments volunteered by panelists.

As a result, worries over the potential for slackening demand for their products and services are on the rise and rank again among the top threats to business growth. Even as the executives project 3% US GDP growth for this year, the average forecast for their own total revenue growth (domestic and/or international) for the next 12 months declined to 6.6%, from 7.6% in the prior quarter. “A US-China trade deal is the linchpin,” said the president of materials supplier to the building industry. “Our clients have the availability of capital to invest in our growth programs, yet interest rates are a factor and there is a volatility in metal markets because of the tariffs.”

The survey of 300 CEOs and CFOs took place over the course of the first quarter, which opened with a one-month federal government shutdown as well as some relief on the US trade dispute with China as the Administration delayed a scheduled 25% increase on tariffs on $200 billion worth of product. Net US economic sentiment* rose to 65% in the first quarter from 63% in the fourth quarter of 2018, though down from a post-recession high of 83% at this time a year ago.

Emerging trouble spots

The game plan for growth: hold the line on operational spending (82% expect to increase expenditures over the next 12 months vs. 84% in the prior quarter), slow projections for workforce expansion while continuing to factor on higher wages for existing employees. “We have been limiting our marketing efforts due to a lack of skill-based workers,” offered the CFO of a US recruitment and staffing services business. “We need a comprehensive immigration policy to start providing businesses with skilled and unskilled workers.”

Panelists are now budgeting for increases in hourly wages for their current workforce at an average of 4.54% over the next 12 months, above expectations in the fourth quarter for a future 4.37% average rise in wages. Their views have served as a good leading indicator of the annual change in US employment costs, and privately-owned companies employ millions in the US.

“The outlook for the US economy is positive; privately-held companies are not pulling back,” said Ken Esch, PwC’s Trendsetter Barometer leader and a partner in Private Company Services. “At the same time, we see demand worries creeping in. Global uncertainties and skills shortages are clearly a factor on expansion forecasting. Resolutions on the trade dispute with China, with Brexit and US immigration reform are at the top of the wish lists.”

About the survey

2019 will mark PwC’s Trendsetter Barometer's 22nd year. Panelists’ views have served as a good leading economic indicator on where US GDP growth is likely to be in a year’s time and whether employment numbers will rise or fall, as well as the trend in total employment costs, our analysis of the data shows. First quarter 2019 results reflect the views of 300 CEOs/CFOs interviewed between January 3, 2018 to March 29, 2019, representing a cross-sector profile of US privately-held firms with average annual enterprise revenue of $365.8 million.

*PwC calculates net economic sentiment as the balance of panelists who are “optimistic” minus those who are “pessimistic” about how they feel about the US economy over the next 12 months. We exclude “uncertain” responses.

Historical trends at a glance

Contact us

Shawn Panson

US Private Company Services Leader, PwC US

Tel: +1 (646) 471 6101

Ken Esch

Private Company Services, Trendsetter Barometer Leader, PwC US

Tel: +1 (312) 298 3419

Margaret Young

Private Company Services, East Region Leader, PwC US

Tel: +1 (864) 577 8816

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