First Niagara Survey: Pittsburgh Business Leaders More Confident About 2013 Economy Than Other Executives in PA

But Western PA Executives Overall Are Less Optimistic Than Last Year

Private business leaders in Pittsburgh are more confident about business conditions for the Pennsylvania state economy and for their own industries in 2013 than other company executives in the state, according to results from First Niagara’s Fourth Annual Survey of Pennsylvania Business Leaders released today.

Overall, the survey conducted by Siena College Research Institute found 715 leaders of private companies in the 10 major metropolitan areas in Pennsylvania to have taken a step back in their confidence levels regarding current and future economic conditions after three years of increasing optimism following the 2007-2008 recession.

As part of the statewide survey, 237 business leaders from Western Pennsylvania participated, including 127 from Pittsburgh/Allegheny County. These leaders included chief executive officers, chief financial officers and other senior managers of private businesses with $5 million to $200 million in annual sales in the service, manufacturing, engineering and construction, retail, wholesale and distribution, financial and food and beverage industries. 

Survey results show Pittsburgh area business leaders are more optimistic than pessimistic when looking at economic conditions they experienced in the last half of 2012 and what they see is ahead through 2013. This level trends even lower, however, when their responses are combined with other Western PA business leaders in counties neighboring to Allegheny County and in the Erie metro area.

“Pittsburgh area executives continue to be more confident about future business conditions for the state economy and for their own industries,” said Todd Moules, Western Pennsylvania regional president for First Niagara Bank. “However, their counterparts in the rest of Western Pennsylvania appear to be frustrated with the ‘new normal’ as they continue to operate their businesses while looking for more robust and sustained economy.”

Regarding confidence levels, the First Niagara survey each year uses an overall Confidence Index as a measure of business leaders’ current assessment of and future expectations for economic conditions regarding the state economy and their specific industries. The index is based on a scale of zero to 200 with zero being the most pessimistic and 200 being the most optimistic.  An index of 100 would be the breakeven point with an equal percentage of negative and positive responses. 

The survey report further provides three confidence indices for the current assessment, future expectations and overall as a combination of the two. 

This year, the Pittsburgh area was the only region in Pennsylvania to top the 100 breakeven point in all three confidence indices, meaning a more optimistic than pessimistic outlook.The Pittsburgh region also registered the highest overall confidence index of any of the nine regions where business leaders were also surveyed by First Niagara in its markets in Upstate New York, western/central Connecticut and south/central Massachusetts.

Pittsburgh area business leaders registered an overall Confidence Index of 106.8, up slightly from last year’s overall index and 16.8 points above that for Western Pennsylvania business leaders as whole. Pittsburgh executives recorded a current Confidence Index of 101.5, up 2.2 points from last year and 18.4 points above Western Pennsylvania, and a future Confidence Index at 112.2 – on the optimistic side of the breakeven point -- down 2.0 points from last year, but 15.4 points above that registered by all Western Pennsylvania business leaders. 

Total Western PA survey results show 37% business leaders expect the state economy to improve in 2013 compared to 33% who say it will worsen and 30% expect it to remain the same.

One quarter, 25% of Western PA business leaders say current business conditions in Pennsylvania were better at the end of 2012 compared to six months earlier. Another 40% say conditions were about the same and 36% say they were a little or considerably worse.

The survey also found 28% of area business leaders say they expect business in their own industries to be a little better or considerably better in 2013, compared to 33% who say it will be the same and 38% say it will be a little or considerably worse.

Just under one-quarter, 23%, of Western PA company leaders say they expect to moderately increase their current labor force in 2013, while 60% say it will remain the same and 15% say they will decrease their work force.

Nearly half, 49%, of regional business executives say they plan to invest in fixed asset acquisitions over the next year – with another 7% unsure -- to meet growing demand, reduce costs or enhance profitability. Of those that intend to invest in fixed assets, 57% plan to use internally generated funds while 34% intend to finance with the assistance of a financial institution. 

Other key survey results for the Western PA region featuring the Pittsburgh and Erie metro areas include:

When it comes to projected revenues, 38% of Western PA business leaders predict increasing revenues in 2013, while 34% think they will stay the same and 28% say revenues will decrease.

For projected profits, 28% of Western PA business leaders expect profits to increase in 2013, while another 33% predict they will stay the same and 38% expect profits to decrease.  

Market growth/demand at 39% was cited as the foremost strategy local business leaders will employ to enhance profits, followed by cost reduction (29%),  price increase (13%) and new technology (10%).

The two top challenges concerning Western Pennsylvania business leaders are adverse economic conditions (21%) and governmental regulation (21%), followed by taxation (16%), and health care costs (15%).  

In Western PA regarding the state government’s ability to improve the business climate in 2013, 2% of business leaders say they are very confident in the ability, 28% somewhat confident, 50% are not very confident and 19% are not confident at all. 

Results from First Niagara’s Fourth Annual Survey of Pennsylvania Business Leaders are available at http://www.siena.edu/sri/pennsylvaniabusinessleaders2013

METHODOLOGY
A quantitative 26-question survey was conducted through the 2012 fourth quarter by the Siena College Research Institute (SRI) where 715 business leaders responded either by mail, on the SRI Web site, or through a personal interview. Business leaders included chief executive officers, chief financial officers and other senior managers of private businesses with $5 million to $200 million in annual sales in the service, manufacturing, engineering and construction, retail, wholesale and distribution, financial and food and beverage industries.  These business leaders represented the major areas of: Philadelphia/Allentown (35% of respondents), Pittsburgh/Erie (33%), rest of statewide including Harrisburg, York, Scranton, Lancaster, Reading, and Altoona (32%).

ABOUT FIRST NIAGARA 
First Niagara, through its wholly owned subsidiary, First Niagara Bank, N.A., is a multi-state community-oriented bank with approximately 430 branches, $36 billion in assets, $28 billion in deposits, and approximately 6,000 employees providing financial services to individuals, families and businesses across Upstate New York, Pennsylvania, Connecticut and Massachusetts. For more information, visit www.firstniagara.com.