Optimism among small- and mid-sized business has reached levels last seen during the pre-recession years of the early 2000s, according to the Vistage CEO Confidence Index, the largest survey of chief executives from small- and medium-sized businesses in the United States. This 10-year optimism high among business leaders indicates that the majority believe the economy has made substantial progress and will continue to grow in 2015.
"In addition to the gain in confidence among CEOs in the closing quarter of 2014, indicators including the likelihood of increased interest rates around mid-2015, a tightening labor market and significant upward pressure on wages reflect the growing strength of the current U.S. economy," said Dr. Richard Curtin, a research professor in economics and the director of consumer surveys at the University of Michigan who analyzes all Vistage survey results. The Vistage Confidence Index, which is scored as the percent giving favorable replies minus the percent unfavorable plus 100, was 107.5 in the fourth quarter 2014 survey – its highest level since 109.8 was recorded in the first quarter of 2005.
Other notable survey findings include:
When asked about the national economy, 49 percent of respondents expected continued economic growth – up from 38 percent in the previous quarter. While this was the most optimistic view on future economic growth in four years, it is still well below the peak of 82 percent set in the fourth quarter of 2004, suggesting that CEOs hold an improved but cautious outlook for the pace of economic growth in 2015.
Net hiring plans were more favorable in the fourth quarter 2014 survey than any other time since the start of 2006. Sixty-two percent of respondents plan to expand their workforce in the year ahead, up from 56 percent in the fourth quarter of 2013 and the highest since 64 percent was recorded in the first quarter of 2006.
In hiring, nearly three out of four respondents cited either locating talent (40 percent) or the lack of skills among applicants (32 percent) as the most significant issue their business faces. The high demand for skilled labor, specifically finding, hiring, and training staff, is mentioned about three times as frequently as financial issues or economic uncertainty, further highlighting the existence of a talent crunch.
"The robust hiring plans among our respondents coupled with a lack of necessary skills within the talent pool underline a tightening labor market," said Leon Shapiro, CEO of Vistage International. "Small- and mid-sized businesses will need to differentiate themselves from their competitors—whether through a unique utilization of social media, stressing expertise or offering flexible work options—while also connecting with the value-driven mentality of younger workers in order to attract and retain top talent."
