Every year, New Hampshire’s Business and Industry Association commissions a survey of the state’s firms. The idea is to get the pulse of how businesses think the next year will go. Do they think economic conditions, hiring, revenues, and capital spending will increase, decrease, or remain the same over the next year?
The answers to those questions–released today in the 2012 NH Business Outlook Survey–weren’t really that surprising. Here are the basics: Compared to predictions for 2011, respondents were slightly less optimistic for 2012…but still “cautiously optimistic.” For example, 14 percent of businesses thought hiring would improve, and 79 percent thought it would stay the same. Meanwhile, 43 percent thought their revenue would go up, and 26 percent thought they’d need to make more capital expenditures. Those numbers are no more than six points below predictions in the 2011 Outlook Survey.
Respondents were much less optimistic about economic conditions compared to the 2011 Outlook Survey. While 47 percent of businesses thought economic conditions would improve this year, only 31 percent think they’ll improve in 2012. Next year, 44 percent of respondents expect the economy to pretty much stay the same. Again, you can file that one under “not surprising,” given the ongoing Eurozone crisis, the continued economic fallout of the Japanese earthquake-tsunami-nuclear accident, the debt ceiling/super committee kerfuffle, high national unemployment rates, etc., etc., etc.
It’s when the survey-takers asked an open-ended question–“identify the biggest problems, or challenges, facing their business today”–that things got really interesting.
So with that in mind…let’s get to the Six Surprising Takeaways from the BIA’s 2012 NH Business Outlook Survey:
- Large businesses are much more concerned about the cost of health care and insurance than small businesses. We wouldn’t blame you for filing this one in the “What??” column. After all, isn’t everyone worried about health care costs? And don’t large businesses have more people to pay for? Well…yes. But if you Google “Obamacare, small business,” you’ll find numerous conservative bloggers and other writers commenting on how, if the insurance tax credit the law gives to small businesses isn’t hurting them, it’s not helping them provide insurance, either. Historically, thanks to their small coverage pools, small businesses have typically paid much higher premiums for their employees’ insurance–if they can insure them at all–than large firms. And yet, the 2012 Outlook Survey found “86 percent of large businesses consider the cost of health care and health insurance a major or minor concern,compared to 66 percent of small businesses.”
- After a brief hiatus, businesses are once again concerned about the high cost of energy. This might be yet another head-scratcher at first look, because New Hampshire has some of the highest energy costs in the country. Of course businesses are worried about high energy costs. But consider this: For the 2010 and 2011 Outlook Surveys, power costs didn’t even register as a major concern. Now it’s returned with a vengeance, rating as a major business concern only behind “poor economic conditions” and “lack of demand.”
- “Lack of qualified labor” rose as a concern for the state’s large firms. New Hampshire’s unemployment rate–about 5.3 percent–is much lower than the national average, which has been hovering around 9 percent. Although we’ve been hearing rumblings from various companies and interest groups about this very issue, it remains surprising. Between the unemployed population and the well-trained labor pools centered in Boston and Cambridge, one might be tempted to think that there would be more than enough qualified workers within easy reach. Businesses, however, don’t appear to agree. It rose from the No. 9 major concern looking to tying for the No. 5 spot as we move toward 2012.
- “High business taxes” tumbled from the No. 3 worry for 2011 to No. 7. The Granite State’s unusual double business tax structure is something that firms talk about a lot. Originally, the Business Profits Tax (BPT) was the corporate tax. But back in the 1990’s, large firms complained, because they were shouldering most of the corporate tax burden. So small businesses were brought into the business tax fold with the Business Enterprise Tax (BET), which is a tax on workers’ wages and dividends. It’s been a thorn in the corporate community’s side ever since. And yet…in 2012, businesses think they’ll have bigger things to worry about.
- After Hurricane Irene, weather’s just not a major worry right now. Looking at the results of the 2011 Outlook Survey, New Hampshire’s business community looks downright prescient. That year, “poor weather conditions” tied with “lack of capital” and “high interest rates” for their No. 4 major concern at the time. Between Irene and Snowtober, the business community was definitely right. But looking at 2012, weather doesn’t even factor in the Top 10 Concerns. Of course, the Northeast didn’t get pummeled by a fall snowstorm until after survey-takers had wrapped-up their efforts.
- Businesses are worried about “too much competition” in 2012: For the market-oriented “Live Free or Die” state, we found this one particularly intriguing. Can you even have “too much competition” in a free market? Interestingly enough, this concern about competition-in-general in 2012 edged out 2011’s No. 10 major worry–“foreign competition.”
You can read the 2012 NH Business Outlook Survey here. It’s a quick read that provides a lot of food for thought for the coming year. (The BIA, incidentally, commissioned the study from RKM Research & Communications of Portsmouth.)
Ed. Note: In a previous version of this post, we inadvertently listed the state’s unemployment rate as 5.4 percent. That was the September figure. The most recent number, from October, was actually 5.3 percent. Also, we previously reported confidence index numbers as percentages. The current percentages listed are correct. We regret the errors.