Private Companies Remain Bullish about Growth Forecasts and Hiring, Despite Concerns over Skills Gap, PwC Survey Finds

NEW YORK, April 28, 2015 /PRNewswire/ -- In a bullish hiring outlook, 63 percent of private companies plan to add fulltime employees in the coming year, although they increasingly worry about a lack of qualified workers and growing wage pressure, reports PwC US's latest Trendsetter Barometer^®.

The quarterly report, which tracks the economic sentiments and business outlook of America's leading privately held companies, underscores that while nearly three-fourths (71  percent) of these businesses are upbeat about the US economy, they haven't been hiring in droves. One reason is that they simply can't find the right workers (cited by 37 percent of companies). However, in spite of these concerns, they're looking to hire more of them in the coming year.

In one of the biggest quarterly jumps since the financial recovery began, headcount at private companies is expected to increase by an average of 2.6 percent, up from the prior quarter's 1.6 percent. Companies with international operations plan to hire even more aggressively, expecting a 3.2 percent workforce increase, while companies selling in China forecast an uptick of 3.6 percent.

Technology and engineering professionals remain highest in demand, and private firms are willing to invest in them. At the same time, they're feeling increased wage pressure at the lower end of the pay scale. Nonetheless, they are budgeting only a 2.6 percent hourly wage increase, in line with their average for the past three years.

"More hiring doesn't necessarily mean better wages," says Margaret Young, a partner in PwC's Private Company Services practice. "That said, businesses are facing increased competition for the right talent, and so we may soon start to see wages reflect demand. But wages are just one consideration when companies contemplate headcount increases. Many other factors go into a decision to add staff, including global competition, technology shifts and demographic changes. Given this complexity, if HR gets involved only when it's time to hire, it's probably too late."

Number of Companies Expecting Revenue Uptick Are at a Post-Recession High

Reflecting their broad optimism about the US economy, private companies' expectations for revenue growth in their own companies and industries was upbeat. Six-of-seven (86%) private company leaders indicated they anticipate positive revenue growth in 2015, the highest number since 2007. Improved gross margins are reported by 31 percent of private companies, the highest in a decade.

While businesses generally are more conservative when looking beyond their balance sheets, they're still predicting that calendar-year growth in their own industries will be 5.4 percent—the highest rate in eight years—while projecting growth of 8.9 percent in their own companies. Taking a view past 2015, companies expect to achieve an even faster growth rate of 9.4 percent for the next 12 months, with 37 percent of companies anticipating double-digit growth.

"We've seen that private companies are generally more optimistic than their public counterparts," says Ken Esch, a partner in PwC's Private Company Services practice. "Their agility in responding quickly to customers' changing demands, coupled with the ability to make long-term investments and weather short-term economic downturns, has generally led to stronger performances and higher growth."

Growth Opportunities for the Year Ahead

Private companies saw few impediments to growth, with only half citing lack of demand as a headwind in the past two quarters—the lowest level since 2005—followed by concerns over the skills gap.

Nearly three-quarters of companies intend to increase operational expenses across a variety of areas, including technology, new products and services, and facilities expansion. One-fifth of companies are planning new strategic alliances, and 37 percent of businesses that sell internationally are planning major capital investments in the next 12 months. Private companies are being judicious in their investments, however, even with good credit availability and historically low interest rates.

About PwC's Private Company Trendsetter Barometer

Each quarter, PwC's Trendsetter Barometer^® tracks the views of top executive officers at privately held US businesses and the trends these reveal. This quarter's report reflects conversations with 220 private-company leaders, including 121 from companies in the product sector and 99 in the service sector, with average enterprise revenues of $504 million. The interviews took place between October 2, 2014 and January 5, 2015.

About PwC's Private Company Services Practice

Located in all major US markets, PwC's Private Company Services (PCS) is a national practice comprised of more than 170 partners who provide customized tax, audit and advisory services to private companies, their owners and high net worth individuals.  The majority of America's largest private companies are PCS clients.^* They span a broad scope of sectors and industries ranging from manufacturing to retail to industrial to professional services.

A hallmark of PCS is a robust thought leadership program that provides clients with timely, thought-provoking information to help manage and grow their businesses and wealth.

Visit us online at pwc.com/us/pcs.

* Forbes 2014 List of America's Largest Private Companies

About PwC US

PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms, which has firms in 157 countries with more than 195,000 people. We're committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com/US.

PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

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SOURCE PwC US

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