Va. CEOs say labor shortages, inflation hurting business
Sales, employment expectations lower than Q1, Q2
Labor shortages and inflation are negatively impacting Virginia businesses, and expectations for sales, employment and capital spending are less positive than during the previous two quarters, according to the third quarter CEO Economic Outlook Survey by the University of Richmond’s Robins School of Business and the Virginia Council of CEOs (VACEOs).
More than 80% of the 48 Virginia-based CEOs surveyed for the report, released Monday, say labor shortages are negatively impacting their businesses, echoing national statistics. A national staffing survey by Provident Bank released last week found that 75% of 1,000 hiring managers and other business professionals who responded have been affected by labor shortages, with many seeing candidates decline job offers because of better opportunities.
Eighty-one percent of respondents also said inflation is negatively impacting their business. Half replied that they expect inflation to rise further during the next six months, and 29% said they expect inflation to decline. The remaining 21% expect inflation to remain at its current level. In September, the consumer price index increased 0.4% for the month to 8.2%, after peaking at 9% in June.
“Rapid inflation and the Fed’s aggressive interest hikes have small business CEOs feeling cautious,” VACEOs Executive Director Scot McRoberts said in a statement.
Although CEOs had positive expectations for sales and employment over the next six months, they reported lower expectations than at the end of each of the last two quarters.
Of the CEOs who responded to the survey, 51% expect sales to increase, with 20% of those expecting at least a 10% increase. While 49% of respondents said they expected sales to be “higher” and 2% expected “significantly higher” sales, 20% said they expected sales to be “lower,” and 29% said they expected no change.
More than half (52%) of the CEOs said they expect employment to increase over the next six months. Thirty-three percent expect employment to remain flat, and 15% expect it to fall.
More than 56% of Virginia CEOs surveyed expect capital spending to remain flat over the next six months. Twenty-three percent expect capital spending to increase, down from 31% last quarter, and 21% expect capital spending to decrease.
Rich Boulger, associate dean at the Robins School, administered the survey from Oct. 5 to Oct. 11. The majority of respondents were in the services and construction industries, and the average company whose CEO responded had about $11 million in revenue for the most recent 12-month period and an average of 57 employees.
The Robins School adapted the survey from Business Roundtable, a Washington, D.C.-based lobbyist association of CEOs of U.S. companies, and has administered it since 2010.