Maryland's small and mid-sized business owners continue to be a bit more optimistic than their peers across the nation despite the threat of rising energy costs, fallout from the subprime market and a proposed minimum wage increase, a nationally known economist said yesterday.
The forecast by Stuart Hoffman, chief economist for PNC Financial Services Group, was the Pittsburgh-based bank's first for Maryland and followed its acquisition last month of Baltimore's Mercantile Bankshares Corp.
"It's not quite up to par," Hoffman told the crowd of about 150 at Renaissance Harborplace Hotel in Baltimore. "It's a little bit of bogey golf for the U.S. economy, but it's not double-bogey or triple-bogey or throw-your-clubs-into-the-nearest-lake."
Hoffman said the economy is in a "soft landing" with a one in four chance of a recession. Maryland, he said, has historically fared better than the nation, and the unemployment rate remains lower than the national average, 3.8 percent compared with 4.4 percent.
"PNC is not preparing ... battening down the hatches," he said.
Most expect gains
PNC surveyed about 150 privately held Maryland businesses between late January and March. About 95 percent had annual revenue of less than $10 million and fewer than 40 employees, and more than half were considered service companies.
Sixty percent of the Maryland employers polled expect profits to increase during the next six months, compared with 54 percent nationally. Almost seven out of 10 Maryland responders expect sales to grow during the same period, compared with 65 percent nationally.
In the national survey, which included more than a thousand businesses, three-quarters of those polled said they aren't concerned about a proposed rise in the minimum hourly wage to $7.25, although one in three retailers and wholesalers said it would affect hiring and prices.
Four out of 10 in the region said they planned to raise prices to cover higher costs for materials, energy, labor and health benefits, with 7 out of 10 planning increases of 3 percent or more. Seven out of 10 said they planned to invest in their business. And a third of the Maryland employers polled said they planned to hire more workers.
But finding quality workers is a challenge, said J. Marshall "Mike" Reid, regional president of the greater Baltimore area for PNC. He said there is such a run on bankers, for example, that wages have "skyrocketed."
That's likely to get even tougher as a result of the Pentagon's base realignment process, known as BRAC, which is expected to bring thousands of government and private sector jobs to Maryland, said Kathleen Snyder, state Chamber of Commerce president and chief executive. Unless a substantial number of employees follow their companies here, those new employers will be looking to steal workers from existing Maryland companies, she said.
"We have got to make Maryland an even better place to live so that people will choose to come here," Snyder said.
Georgia S. Hoff, who with her husband, Samuel, owns the Samuel C. Hoff Agency-Real Estate & Insurance in Westminster, said the region's high housing prices are one big deterrent. Many of her employees commute from Pennsylvania, she said.