Findings

REGIONAL BUSINESS OWNERS SAY ECONOMY IMPROVING SIGNIFICANTLY, ALTHOUGH INFLATION HAS REAPPEARED AND PRICES WILL BE RISING THE RAINIER GROUP SURVEY REPORTS STRONG OUTLOOK FOR NEW JOBS CONTINUED ECONOMIC RECOVERY LEADS TO STRONG SUPPORT FOR BUSH AMONG BUSINESS OWNERS

PORTLAND, ORE. – Oct. 15, 2004 – Findings of The Rainier Group Business Owner Confidence Survey released today indicate that the economy of the Pacific Northwest continues to strengthen, the outlook for the future and new jobs has improved markedly in the past year, Bush is the prohibitive favorite  — and inflation has returned.

“Oregon business owners are more confident about the future of the economy than they were 12 months ago, as indicated by a dramatic turnaround in plans for hiring new employees and making capital investments,” said Don Bielen, principal of The Rainier Group in Portland, which provides Business Transition PlanningTM for privately held companies. “At the same time, that confidence may be tempered by the effects of higher fuel prices and the reemergence of inflation.”

Bielen noted that “the confidence may explain why nearly 90 percent of business owners in Oregon believe that Bush will be better for business than Kerry.”

Increased Optimism

According to the survey, business owners across the Pacific Northwest have changed their minds about the state of the economy during the past 12 months. When asked to rate the current environment for their company on a scale of one to ten (one = worst, ten = best), the average response was 6.8, up significantly from January’s 5.6 and from 5.4 in September 2003. In Oregon, the business confidence rating moved to 5.12 from 4.5 in January and closer to the 5.5 measure of 12 months ago.

The economy may underpin business owners’ choices for president, with 74 percent across the region believing Bush would create a climate more favorable to business, 12 percent saying Kerry and 12 percent saying there would be no difference between the two candidates.  In Oregon, 88 percent believe Bush would create a better climate for business, 12 percent say Kerry and none say no difference.

Economy Recovers – and Inflation Returns

One effect of a recovering economy is the return of inflation. Bielen stated that “inflation in the form of higher fuel prices and price increases from suppliers has led many business owners to prepare to raise their prices.” Across the region, 61 percent of business owners said they had noticed higher non-fuel related prices from their suppliers. In Oregon, 76 percent said they had noticed higher non-fuel related prices.

Regionally, 62 percent said that higher fuel prices will affect operations minimally, 24 percent said moderately and 14 percent said significantly. In Oregon, 44 percent said that higher fuel prices will affect operations in the next six months minimally, 38 percent said moderately and 18 percent said significantly.

Business owners are preparing to raise prices at some point in the next six months.  On a regional basis, 66 percent of business owners said they will raise prices. In Oregon, 76 percent said they expect to pass along price increases in the next six months.

Positive Key Indicators:  20 point Uptick in Hiring in Past Year

But the specter of higher prices tends to be outweighed in the minds of business owners by the positive trends they see.  The survey’s results indicate strong and positive trends about privately held businesses and the economy based on four key indicators:  hiring, capital expenditures, revenues and profits.

Employment continues a strong upward trend. Among Pacific Northwest business owners, 52 percent plan to increase hiring in the next six months and 38 percent will maintain the current level. Only 10 percent expect to reduce staff. That compares favorably with past measures:  In January, 42 percent of business owners across the region said that they expected to hire new employees, up from only 32 percent in September 2003. The responses for Oregon show a similar trend – a 23 point swing — during the same 12 month period. Forty-seven percent said they plan to increase hiring while 18 percent said they plan to reduce staffing. In January, 38 percent said they planned to add new employees, up from 24 percent in September 2003. 

Companies continue to show a healthy habit of making capital investments.  Across the region, 41 percent of business owners expect to make them in the next six months.  That is consistent with the 42 percent seen in January and is up from 35 percent in September 2003.  In Oregon, 35 percent plan on capital improvements in the next six months; that is slightly down from 38 percent in January but up significantly from 19 percent last September. “The increased capital investments in 2004 indicate that Oregon business owners believe the economic recovery will continue to gain momentum in the near term and be sustainable,” commented Bielen.

Revenues and profits are also expected to continue improving in the next six months. Among Pacific Northwest private companies, 80 percent expect increased revenues in the next six months, up sizably from 72 percent in January and 68 percent in September 2003.  On the profits side, 75 percent reported that they expect improved profits during the next six months, up from 67 percent in January and 65 percent in September 2003. In Oregon, 76 percent of privately held companies expect to have improved revenues, compared to 75 percent in January and up dramatically from 48 percent in September 2003. The picture in Oregon for profits also is good:  71 percent expect improved profits in the next six months, compared to 75 percent in January and again up dramatically from 48 percent in September 2003. 

“The disparity between the positive indicators and the lukewarm business confidence measure may be due to timing,” said Bielen. “The confidence measure focuses on the present, while the indicators look to the future.”

The latest The Rainier Group Business Owner Confidence Survey, released twice a year by The Rainier Group, was conducted in September 2004. It features the opinions of owners of large privately held companies, with annual revenues ranging from ten million dollars to 1 billion dollars, located primarily in Washington (59 percent) and Oregon (33 percent).

The Rainier Group

Since 1988 The Rainier Group has provided more than 700 private businesses across the nation with Business Transition Planning and related services through its offices in Bellevue and Portland