BEACON, ESRGC Release Latest Eastern Shore Business Sentiment Survey Results
SALISBURY, MD---Eastern Shore business owners and managers’ recent uncertainty about the economy remains in the short term, while confidence and optimism about long-term survival is positive.
These trends are among the findings of the latest Eastern Shore Business Sentiment Survey conducted through a partnership with Salisbury University’s Business Economic and Community Outreach Network (BEACON), SU’s Eastern Shore Regional GIS Cooperative (ESRGC), and many of the region’s economic and workforce development professionals.
The December 2022 results represent the fourth report released by BEACON. The first survey in the series was conducted in June 2021, with a follow-up in December 2021, and the most recent report in June 2022.
The survey included more than 50 questions, asking business leaders to weigh in on a range of topics, from general business concerns to conditions in their own industries. Respondents evaluated business conditions locally, regionally, in the state and nationwide for the coming year. They also shared views related to their specific industries and on issues from labor supply to regulations.
• The 12-month outlook for business conditions in participants’ respective counties is significantly lower than in December 2021. When asked to predict the business conditions in their counties and the Eastern Shore, 38% responded that they believe economic conditions will worsen, compared to 23% in December 2021. Those responding “Much Better/Better” fell by 22 points over 12 months. On a state and national level, almost 49% of participants believe economic conditions will be worse, compared to 24% in December 2021.
• Businesses are generally confident about their operation on a longer horizon, nearly 86% believe their firm will be operating locally in the next five years, with just 6% predicting business will not be operating locally five years from now.
• Expectations for business conditions locally improved slightly from June 2022 to December 2022, but remain far from ideal. “Much Worse/Worse” responses fell from 44% in June to 38% in December. “Unchanged” responses increased to 37% in December after sitting at 32% in June, and “Much Better/Better” responses increased slightly to 25% from 24% in June.
• Reflecting on their individual industry sectors, 51% of respondents believe business conditions “Deteriorated A Lot/Deteriorated Slightly” from December 2021-December 2022. Respondents remain cautious about the future, with 48% believing business conditions in their sector will “Deteriorate/Deteriorate a lot” over the next three months.
• Respondents assessed labor force issues as the most significant barrier to expanding in their sector, followed by inflation then finances and funding. The highest barrier to starting a new business in their specific sectors was finances and funding, followed by inflation and labor force issues. Continued low unemployment and the quality of labor has impacted labor issues. The Federal Reserve’s interest rate increases designed to control inflation likely contributed to financing concerns.
• When asked which cost increase in the previous six months had the greatest impact on the respondents’ businesses, they noted that the increase in payroll and benefits had the highest impact. Close behind, the cost of fuel and transportation and utilities had the second and third largest impacts on local firms.
• Respondents agreed payroll and benefit costs (previously titled “wages”) in the next 12 months would be much worse in their county, region and state, and nationally, and had noticeably increased from June’s survey. “Worse/Much Worse” responses rose to 54% from 13% in the county, with similar increases in the region, state and U.S.
• Even after the events of the COVID-19 pandemic, a majority of respondents’ firms do not have remote workers (72%). Of the firms with remote workers, the majority of the workers are located on the Delmarva Peninsula.
• Some 83% believe household income for the average American has fallen behind the cost of living, while only 4% believe household incomes have surpassed the cost of living.
• Respondents were split on their expectations of the standard of living in the next five years. Across all areas, 41% believe it will fall, while 30% think it will remain the same, and 29% think it will rise.
• Participants believe that America’s economy is “In a Recession/Depression” (47%), while 26 believe the economy is “Stagnating,” and 26% believe the economy is “Growing Rapidly/Growing Slowly.”
• A majority of responses came from company leadership, with business owners, presidents, CEOs and managing partners making up 67% of the participants. A total of 77% were from firms with fewer than 50 employees. Responses came from a wide variety of industries reflecting the economy of the region, with many respondents active in more than one industry.
Counties on the Eastern Shore will continue to conduct the survey every six months, with the data used to identify challenges facing the region, to assist in long-term planning and to guide the development of public policy.
“The survey has evolved this year as we have removed the COVID questions and replaced them with questions that gauge the impact that other variables have on the businesses in the region,” said Scott Warner, executive director of the Mid-Shore Regional Council. “This will allow us to craft assistance that can impact the evolving needs of our business community.”
The ESRGC summarized the findings in infographics that can be found on the Eastern Shore Economic Recovery Project website, but economic developers also have access to an internal dashboard that enables them to mine the data for insight on specific issues.
“Expanding access to the data on our area is vital to being responsive to our constituents. The toolkit provides a look at trends and data to anticipate business needs and adjust quickly,” said Greg Padgham, Tri-County Council for the Lower Eastern Shore executive director.
Designed to gauge the opinions of the region’s business leaders, this survey is one of the tools that has grown out of the Eastern Shore Economic Recovery Project, a venture made possible by grants totaling $507,000 from the U.S. Economic Development Agency (EDA). The Mid-Shore Regional Council and the Tri-County Council of the Lower Eastern Shore are recognized as Economic Development Districts by the EDA.
In addition to the regional councils, partners in the project include ESRGC, BEACON, the Lower Shore Workforce Alliance, the Upper Shore Workforce Investment Board, and the Caroline, Cecil, Dorchester, Kent, Queen Anne’s, Talbot, Somerset, Wicomico and Worcester County economic development offices.