Overall confidence among Rochester’s business leaders reached a four-year high last year, and Rochester was one of two regions upstate to report an improvement in 2018, an annual report from the Siena College Research Institute (SCRI) shows.
With an overall confidence index of 96.6, some 28 percent of Rochester respondents said current business conditions were a little or considerably better than they were six months ago. The 12th annual Upstate New York Business Leader Survey, sponsored by the Business Council of New York State Inc., spoke with more than 100 business leaders in Rochester and more than 425 across upstate.
Upstate confidence remained relatively high in 2018, dropping 0.5 point to 96.6. Still, that is below the breakeven point of 100, the point at which equal amounts of business leaders are optimistic and pessimistic about the economy.
“Across upstate, business leader confidence stayed virtually unchanged and remains just below the magic breakeven point this year,” SCRI Director Don Levy said. “Confidence declined in Albany but remains strong and the highest of the four regions. Buffalo was up by almost two points but is still well below breakeven. Rochester rose by three points and Syracuse fell, but sits right on the upstate number.
“Despite holding steady overall, CEO’s future expectations are the lowest we’ve seen in six years,” he added.
Forty percent of Rochester business leaders said they expect the economy to be about the same this year as it was last year, while 30 percent said they expect it to be a little or considerably better.
Some 15 percent of CEOs here believe their revenues this year will decrease moderately or substantially, while 42 percent expect sales to grow moderately. Thirty-nine percent of business leaders expect to enhance their company’s profitability over the next year via market or demand growth, while a quarter said they would accomplish that through cost reduction. Twenty percent expect price increases to enhance profitability this year.
More than half of Rochester’s CEOs said expansion of existing markets was and will continue to be a major area of concentration, and 48 percent said growth in existing products will be a focus. One-third said technology innovation will be an area of concentration this year. Some 58 percent plan to invest in fixed assets this year.
Employment may be on the rise in Rochester this year, as 30 percent of business leaders here said they expect to moderately or substantially increase their workforces. One-tenth said they plan to decrease their workforces in 2019.
Challenges faced by area businesses include health care costs (71 percent), governmental regulation (62 percent), taxation (60 percent) and human resources (47 percent). Some 68 percent of local business leaders said the government in New York State was doing a poor job, while 27 percent said it was doing a fair job. More than half of Rochester respondents said they wanted the governor and legislature to focus on personal and business income tax reform and spending cuts.
Nearly half said they were not at all confident in the ability of the government to improve business conditions for their businesses this year; they were far more optimistic about the federal government improving conditions for their businesses this year. More than half said the federal government is doing a good or excellent job of creating a business climate for companies like theirs.
“Upstate CEOs continue to have little confidence in state government’s efforts to enhance business conditions,” Levy said. “CEOs call for spending cuts and tax reform, and they feel as though the state is moving in the wrong direction on the regulatory environment, spending, ethics reform and workers’ compensation reform. About half, 48 percent, say the Paid Family Leave Law has negatively impacted them.”
More than three-quarters of Rochester’s CEOs oppose placing restrictions on questions about salary history when hiring, a proposal that many say would help close the gender wage gap. Sixty-one percent said they oppose placing restrictions on questions about credit history as well.
“We are seeing several significant recurring themes,” Business Council President and CEO Health Briccetti said. “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.”
Briccetti noted that employers remain concerned about the availability of skilled workers.
“To us, the message is clear: the state needs to both promote economic growth and reduce self-imposed economic headwinds,” she said.
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