Only 12 percent of New Jersey business owners expect the economy to fare better in the first half of 2020 than it did in 2019, according to the New Jersey Business and Industry Association’s 61st annual business outlook survey.
With 40 percent expecting it to be worse, the -28 percent net outlook for the state’s economy is the lowest it’s been since 2009, in the midst of the Great Recession.
More than half of respondents (56 percent) forecasted a recession in 2020 or 2021. Those business owners have a course of action planned: 62 percent said they will reduce operational costs, 50 percent plan to grow their customer base, 35 percent will postpone hiring and 32 percent will stall raises.
“While New Jersey businesses continue to have solid returns, there is no question they are feeling the weight of increased costs and mandates,” said NJBIA President and Chief Executive Officer Michele Siekerka in a statement. “We can ascertain from these responses that New Jersey’s challenging business climate, coupled with the many forecasts of an economic slowdown, are giving our business owners pause for what’s ahead.”
The NJBIA sent members its annual survey in September, and 878 business owners responded. Of respondents, 61 percent were small business owners, employing 24 people or less. Results were released Wednesday.
In terms of expansion, 14 percent of those surveyed said they would open another location of their business in New Jersey, and 30 percent said they would open out of state. Respondents listed New Jersey as very good or good (21 percent), fair (41 percent), or poor (38 percent) as the location for new or expanded facilities.
In the last year, business owners reported a net positive +17 percent employment, with 27 percent saying employment increased at their company and 10 percent saying it decreased. Hiring outlook remains positive for 2020, with 30 percent expecting to increase employment at their company in 2020, and 9 percent anticipating moderate or substantial decreases in employment. The net positive of +21 percent is lower than last year’s projections, however, which were +32 percent.
More than half (54 percent) of member businesses said that their sales increased in the last year, and 54 percent anticipate an increase in sales in 2020. Profits are strong as well, with 48 percent reporting profits for the year and 49 percent expecting an increase in profits in 2020.
Costs present an issue for New Jersey businesses, though, with 89 percent of respondents viewing New Jersey’s taxes and fees as worse than other states. Other cost-related concerns include controlling government spending (79 percent), controlling health care costs (67 percent), controlling labor costs (65 percent), and the cost of regulatory compliance (62 percent).
Sixty-eight percent are concerned about attracting business to the state and 60 percent are concerned about attitude toward business.
“New Jersey’s affordability and regional competitiveness continue to be challenged,” said Siekerka. “While our greatest assets like our schools and workforce continue to rank high, the factors driving our ability to afford those assets continue to be even more expensive and of greater concern year over year.
“This is why NJBIA continues to call for a reform agenda in order to get these outlier costs under control, especially right now with concerns of a recession on the horizon.”
We can ascertain from these responses that New Jersey’s challenging business climate, coupled with the many forecasts of an economic slowdown, are giving our business owners pause for what’s ahead.
– Michele Siekerka, president and CEO, NJBIA
New Jerseyans are less concerned about the impacts of the minimum wage increase than last year, with 51 percent expecting an impact on their business compared to 66 percent who expected an impact last year. Of those who are concerned, 32 percent say they will raise prices, 21 percent will reduce staff, 15 percent will reduce benefits and 13 percent will look toward automation as a result of the minimum wage increase.
New Jerseyans are also less concerned about the potential legalization of adult-use cannabis than last year, with 33 percent of respondents conveying no concern compared to 23 percent of respondents that showed no concern in last year’s survey.
Of those concerned, 84 percent are worried about safety in the workplace, 75 percent are concerned about productivity, 45 percent are concerned about chronic absenteeism, 17 percent are worried about the proximity of dispensaries, and 22 percent are worried about something else.
In regard to locating competent employees, businesses face more issues finding highly skilled workers than entry level workers. Thirty-two percent of employers still have a hard time finding entry level employees, compared to the challenge felt in finding technical and middle-skilled employees (63 percent) and professional and highly skilled employees (62 percent).
More than half (52 percent) do not offer internships, apprenticeships, or externships.
In the conclusion of the report, the NJBIA called New Jersey businesses “bullish,” but that they’re showing more caution going into 2020 than 2019, and that the state needs to improve its business climate and competitiveness with other states.