More than two-thirds of businesses responding to an annual survey
by the Civic Entrepreneurs Organization (CEO) and the St. Louis
Regional Chamber and Growth Association (RCGA) plan to expand
their operations and hire more employees in the next 12 months.
However, in a turnaround from last year’s survey, a majority
of respondents said their company’s profits will not increase
by more than 10 percent over the next year. In results similar
to last year’s, nearly three-fourths said they find it difficult
to raise prices on goods and services.
Fewer than half the respondents (46 percent) believe business
conditions are stronger than a year ago. This is a significant
change from the more positive assessments in the 2006 and 2005
surveys, in which 66 and 84 percent of the respondents, respectively,
predicted better conditions than the previous year. Economic
conditions appear to have improved the most in the retail and
wholesale trade, construction, communications, consulting, insurance
and healthcare, and real estate and lodging industries. Executives
in manufacturing, transportation, finance and business services
are less optimistic.
A majority of respondents (66 percent) said they plan to hire
more employees over the coming year—down slightly from the 72
percent who planned to take on more employees in 2007. Communication
and consulting executives are the most positive about hiring
increases. Sixty-two percent of the respondents report that
there is an adequately trained work force in the St. Louis area
to meet this demand —an increase of six percentage points from
last year. The capital spending outlook for 2008 is also generally
positive, with 62 percent of firms inclined to boost capital
spending over the next year, a result similar to last year’s
survey.
Respondents are less optimistic about their profit prospects
in the coming year. Just 42 percent of executives believe their
companies’ profits will increase by more than 10 percent, compared
with 56 percent last year. Profit prospects look brightest
in the consulting industry, with media companies also noticeably
upbeat. Similar to last year, 72 percent of respondents said
they find it difficult to raise prices on their goods and services.
However, significant percentages of respondents in the manufacturing
(40 percent) and consulting (36 percent) sectors disagreed with
this sentiment, noting some pricing power.
Only 28 percent of the executives expect to see improved credit
market conditions over the next 12 months, down 20 percentage
points from last year’s survey. Respondents from the real estate
and lodging industry are the most optimistic, with retail and
wholesale trade, manufacturing and the business services executives
less so.
In the national outlook, respondents predict little change in
the rate of economic growth, relatively low unemployment and,
perhaps, only a minor upward drift in long-term interest rates.
They expect inflation to rise modestly over the next 12 months
and for oil prices to continue to be high. Regarding Fed policy,
43 percent believe the Fed will ease the target for the fed
funds rate over the next 12 months. Finally, executives expect
modest increase in stock prices in the next 12 months. Local
economic development agencies received lower marks than last
year, with 59 percent of executives saying that the efforts
of such organizations are generally effective, compared with
64 percent in 2006.
“This year’s survey reflects continued opportunity in the St.
Louis business environment with many of our business leaders
planning expansions that will support employment growth despite
some tempered optimism in profitability,” said Jan Vest, CEO
of Signature Health Services Inc. and current president of the
Civic Entrepreneurs Organization. “Given the uncertainty in
today’s markets, I expect this year’s CEO forecast event will
provide very valuable insights for our guests.”
Richard C. D. Fleming, president and CEO of the RCGA, said the
planned expansions in area business operations and in the labor
force bode well for the regional economy. “The region is supporting
new and expanding businesses because of the positive business
and entrepreneurial climate. We will continue economic development
efforts aimed at enhancing this climate and building on the
area’s advantages for conducting commerce,” he said. The full
survey results are available by calling CEO at (314) 615-8283
or by logging on to www.ceo-stlouis.org.
Civic Entrepreneurs Organization’s 20th annual economic forecast
event was held Oct. 18, at the America’s Center Ballroom.
The moderator for this year’s event was Mike Jensen,
the former chief financial correspondent for NBC News. Jensen
is also a former New York Times financial reporter and an Emmy
winner.
Speakers for the event were: Kathleen M. Camilli, founder
and principal of Camilli Economics LLC; Charles V. Payne,
CEO and principal analyst of Wall Street Strategies; and Brian
Wesbury, chief economist at First Trust Advisors L.P.
Civic Entrepreneurs Organization is a not-for-profit organization
of business executives who contribute to the cultural and economic
vitality of the region by creating and producing unique community
projects and events. In addition to the annual fall economic
forecast event and the spring healthcare forum, current projects
include an arts education program in the schools of the city
of St. Louis; a public art exhibit that tours schools and public
facilities in the St. Louis metropolitan area; a 12-week workplace
wellness program called the Gateway to Health Challenge; and
the Gateway Dragon Boat Festival.
