More Optimistic Outlook from Privately Held U.S. Companies

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In the second quarter of 2013, 59% of privately held companies surveyed by PricewaterhouseCoopers LLP were optimistic about the U.S. economy. That’s up from 50% in the first quarter of this year and 50% in the second quarter of 2012. Optimism about the global economy is also up from last year, but essentially stable sequentially at 39% of survey respondents who make international sales.

The percentage of companies planning major new investments is again roughly stable at 31%, but 57% of privately held firms expect to be hiring workers, compared with 52% in the first quarter and 54% in the second quarter of 2012.

The most often-cited barrier to growth is lack of demand, which 65% of respondents said was the biggest problem. Legislative and regulatory issues were cited by 55% of businesses and 37% cited higher taxes as significant barrier to growth.

One interesting finding is that international companies selling into China reported a negative 6% margin, which PwC said reflects cost and price pressures. That could be due partly to the size of the 202 companies surveyed, which averaged $306 million in annual sales. Of the companies that sell internationally, average international sales over the next 12 months are projected to be 17% of their total sales. Margins are probably hard to maintain against Chinese competition with sales of that magnitude.