The overall confidence of Rochester’s business leaders has reached its highest level since 2014 and is higher than all but one of the last six years, a survey released today shows.
In Siena College Research Institute’s Upstate New York Business Leader Survey, now in its 12th year, overall confidence among Rochester business leaders is 96.6, up 3.2 points from the year before and 7.9 points from two years ago. However, it remains below 100 points, the dividing line between optimism and pessimism.
The overall confidence level across Upstate New York is identical—96.6, down 0.5 points compared with a year earlier.
“Rochester is up a bit, more in terms of current confidence,” says Don Levy, director of the Siena College Research Institute. “They’re not saying it’s going gangbusters.
Siena College Research Institute director Don Levy and Business Council president and CEO Heather Briccetti will be among the panelists Monday, Jan. 28, at the Rochester Beacon 2019 Economic Forecast Forum. Tickets for the event, sponsored by Bond, Schoeneck & King, are $20 and are available for purchase online.
Among Rochester survey respondents, Levy notes, there are three distinct camps: “Optimistic and pessimistic are roughly equal, with a larger group in between. (So, things are) steady, solid, but not moving a lot one way or the other.”
Current confidence in Rochester is 96.4, up 6.8 points from a year ago and higher now than in six of the last seven years. It still trails the upstate number, 97.3, but by only 0.9 points.
Future confidence in Rochester, at 96.8, is down 0.4 points compared with the year before, but it is 0.9 points higher than the number across upstate.
Data collection for the annual survey, which is sponsored by the Business Council of New York State, began in October and was completed Jan 4. Nearly 430 top executives of private, for-profit businesses in Rochester, Buffalo, Syracuse and the Capital Region took part. The Rochester region accounted for 124 of the total respondents.
This year’s survey contained 32 questions. Along with business confidence, the participants were queried on a wide range of topics including hiring plans, revenue and profitability expectations, public policy issues, and the performance of the state and federal governments.
Asked about New York business conditions looking forward, 30 percent of Rochester respondents expect improvement—exactly the same percentage as those who anticipate worsening conditions. Forty percent expect conditions to remain the same.
Even among those who view New York positively as a place to do business, the state government gets little credit for creating conditions that help companies to thrive. Rochester survey participants who think Albany is doing an excellent or good job declined 5 points—from 9 percent a year ago to only 4 percent now. Ninety-five percent give the state government either a fair or poor grade, with 68 percent saying poor.
The dim view of state government is held by business leaders throughout upstate, Levy noted, but Rochester respondents were slightly more negative. This sentiment has changed little in the last six years.
“They remain desperately unhappy with Albany,” he says. “We’re running out of room on the curve (to be much lower).”
By contrast, Levy says, the most striking difference in the latest survey might be the big upswing in views of the federal government. In Rochester, 56 percent of respondents—up from 30 percent a year ago and only 8 percent in 2016—think the federal government is doing an excellent or good job of creating a business climate in which companies like their own can succeed. Those saying fair or poor declined to 43, down from 66 percent last year and 86 percent the year before that.
“It’s a dramatic change,” Levy says. “Despite the day-to-day drama, on balance they are far happier with the Trump administration than with Obama.”
Read more from Siena survey respondents: “Optimism mixes with concern over regulation, taxes”
As factors in the change, he points in particular to the Tax Cuts and Jobs Act that took effect in 2018, along with loosening of many regulations that impact businesses.
“However, they continue to see the budget deficit as a big problem,” Levy notes. Two-thirds of Rochester business leaders think the country is moving in the wrong direction on the deficit. (More than half also think the cost of health care is heading in the wrong direction.)
Business Council president and CEO Heather Briccetti sees several significant recurring themes in Siena survey.
“While business leaders feel confident in how they are addressing factors within their control, and that they have benefited from some major federal policy initiatives, they still feel that a major burden is being imposed by New York State, with little expectation of relief,” she says.
“Moreover, their survey responses continue to reflect the reality of modest economic growth across upstate New York. Importantly, businesses are continuing to make capital investments in order to improve productivity, but most are projecting modest job growth, and moderate sales growth, for 2019. To us, the message is clear—the state needs to both promote economic growth, and reduce self-imposed economic headwinds.”
Among other findings of this year’s survey of Rochester business leaders:
• Forty-three percent expect their revenues to increase, down slightly from last year’s 45 percent and below the 50 percent rate across upstate. Fifteen percent expect revenues to decline, and 42 percent think revenues will remain about the same.
• On profits, 32 percent expect they will increase, 40 percent expect no change and 27 percent anticipate a decline. A year ago, the results were 37 percent increasing, 36 percent remaining the same and 27 percent expecting decline.
• Fifty-eight percent intend to invest in fixed assets this year, up from 54 percent a year ago and 48 percent two years ago. This is an important indicator of business confidence, Levy notes.
• Twenty-nine percent intend to increase their workforce. This is unchanged from last year but down from 37 percent two years ago. Ten percent intend to shrink their workforce, down from 12 percent a year ago.
• A plurality of business leaders here (39 percent) plan to boost profitability by increasing the demand for their product or service. That compares with 25 percent who will focus on reducing costs to enhance profitability. Across upstate, 21 percent (20 percent in Rochester) plan to increase prices—the highest rate seen in the 12 years of the survey.
• On potential challenges about which they are most concerned, they cited health care costs (71 percent, down from 79 percent), taxation (60 percent, down from 65 percent), and governmental regulation (62 percent, unchanged). Human resources has increased (47 percent, up from 35 percent) and, Levy says, now approaches the big three challenges of health care, regulation and taxes.
• Looking ahead, 65 percent of respondents—up from 61 percent a year ago—say they expect their company will be in business in New York 10 years from now.
• But only 32 percent (up slightly from 30 percent year ago) say that if they had it to do all over again, considering all factors, they would locate their business in New York.