Demand highest over Q4 for technology and industrial/production skills
Trendsetter Barometer® business outlook
CEOs and CFOs of privately-held companies are planning for a boost in wages in 2018 that will be larger than they have seen in years, according to PwC’s Trendsetter Barometer latest quarterly survey. Panelists are now projecting average increases in hourly wages for their current workforce of 4.27% over the next 12 months. The last time panelists projected average wages would rise above 4% was during the second quarter of 2007.
These projections take place against the highest level of confidence in growth conditions in the US since 2004. A net 77%* of panelists are optimistic about the US economy. Private-company leaders are now projecting higher revenue growth at an average of 7.8% over the next 12 months, up from expectations for annual growth of 7.2% during the third quarter.
Wages, benefits and bonuses under review
The wage-spending plans send a strong signal that employee pay is finally looking to respond to a tighter US job market and secondly, that hikes may not take place in an incremental fashion either. Panelists’ expectations for annual increases in employee pay have been rising by an average of 0.75 points per quarter over 2017.
Privately-held company outlooks for wages have been a good predictor of annual growth in US employment costs overall. As a result, in addition to budgeting for higher wages, we expect private companies are likely to consider more investment in employee training as well as to make greater use of wage-related incentives like stay or signing bonuses to attract new people and hold on to the experienced talent they already have in place. Existing pay packages, in some cases, are not attractive enough, some panelists say. “It’s hard to find qualified employees,” said a CFO of a dealership that leases and provides heavy equipment services. “We will be hiring techs to service the tractors we sell… People do not want to do these kinds of jobs.”
Private-company leaders are not signaling intentions to reduce hiring. A net 53% say their workforces will expand this year, up from 49% in the third-quarter of 2017. Demand is highest for technology/engineering skills and for skilled/specialized industrial-type jobs.
Their views on wages and hiring do not necessarily reflect the changes to the US business tax system that were enacted at the close of 2017. These included a lower effective rate and incentives to increase business spending. The 300 Trendsetter panelists were interviewed October 2 to December 29, 2017.
Find the complete picture on private company outlooks for the US economy, as well as their own company growth outlooks and performance by navigating through the tabs below.
PwC’s Trendsetter Barometer is a quarterly survey of CEOs and CFOs of privately-held companies, is now in its 21st 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, our analysis of the data show. Fourth quarter 2017 results reflect the views of 300 CEOs/CFOs interviewed between October 2 to December 29, 2017, representing a cross-sector profile of US privately-held firms with average annual enterprise revenue of $373 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.