New Family Business Survey Finds Cincinnati Firms More Optimistic About The Economy

Most area family business owners have a positive economic outlook according to the most recent Greater Cincinnati Family Business Survey. However, the optimism was tempered by caution. Fewer than half of the respondents believed that now is a good time to expand their business and fewer than 42 percent plan to make capital expenditures in the next three to six months. While local businesses have apparently increased employment to fill existing vacancies, investments that require capital spending, appear to be less common.

The questions on the expectations of higher earnings elicited the strongest statement of optimism: almost 92 percent believed that the economy in general would either improve (41 percent) or stay about the same (51 percent). Only 8 percent felt it would get worse. Family business owners also felt positive about the employment situation. A large majority expect to increase employment in the next quarter and few of them had difficulties filling job vacancies during this survey period.

The survey is designed so that local responses can be compared with family and independent businesses throughout the nation. Local respondents continue to show a more positive outlook than national respondents. Local responses were more positive concerning expectations for an improved economy, higher retail sales and increased employment. However, local respondent’s plans for capital expenditures fell well below their national counterparts.

Since the previous survey, conducted in the 4th quarter of 2011, a larger share of local respondents expect the economy to improve, expect higher real sales, better credit conditions and to increase employment.However, a smaller proportion believes it’s a good time to expand and plan to make capital outlays. The net percent of local businesses expecting growth in real sales was unchanged.

The quarterly Greater Cincinnati Family Business Survey is sponsored by First Financial Bank, and conducted jointly by University of Cincinnati’s Goering Center for Family and Private Business and the Economics Center.

Other indicators

Other economic indicators show some positive signs. Nationally, the Conference Board’s Consumer Confidence Index remains at a relative peak since March of this year (an index value of around 70), compared to the most recent trough in November of 2011 (at an index value of 40.9). This is the highest series of consecutive index values in the past several years. Inflation has returned to the typical long-term national average of just under 3 percent, potentially mitigating concerns of deflation. This compares with recent trough levels of the end of 2010 (around 1%) and mid 2009 (-2%).

The real estate market, national and locally, continues to be a focus of concern. According to the National Association of Realtors the median sale price of existing family homes continues to decline.  Locally median prices experienced a greater decline than nationally in the fourth quarter of 2011, 5.9 percent in Cincinnati compared to 4.2 percent nationwide.

National Real Gross Domestic Product (rGDP) continues to grow at an average quarterly rate for the past two years of just half of a percent. In the past year, rGDP has grown by 2.07%.Locally, however, the 2012 Regional Outlook indicates more substantial growth in Gross Regional Product , around 2.4% and total employment at around 1.4% (up from 1.7 and 1.1% one year ago, respectively).The local projection accords with local businesses’ relatively more optimistic sentiment compared to their national counterparts.

The Greater Cincinnati Family Business Survey is conducted quarterly. For further information, please call Sid Barton, PhD, at (513)556-7185 or email

Sid.Barton@uc.edu

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About the Goering Center for Family and Private Business

Founded in 1988, the Goering Center for Family & Private Business at the University of Cincinnati’s Carl H. Lindner College of Business is a leading resource for family and closely held business education and information. To accelerate their growth, the Goering Center helps member firms address the unique issues such businesses face, including leadership development, succession planning, governance issues, communication techniques, compensation issues, conflict resolution, strategic planning and advisory boards. More information is available at the Goering Center’s web site

goering.uc.edu

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About the Economics Center

Founded in 1977, the Economic Center is a leading provider of economic resources for educators, students, businesses, and public agencies. The Research and Consulting Division of the Economics Center provides knowledge building blocks that help clients make better finance, policy and economic development decisions. Its dynamic approach and critical data analysis empower business and civic leaders to respond to changing economic conditions, strengthen local economies and improve the quality of life for their communities. The Economic Center’s web site is at

economicsresearch.org

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About First Financial Bancorp

First Financial Bancorp is a Cincinnati, Ohio based bank holding company. As of December 31, 2011, the Company had $6.7 billion in assets, $4.0 billion in loans, $5.6 billion in deposits and $712 million in shareholders’ equity. The Company’s subsidiary, First Financial Bank, N.A., founded in 1863, provides banking and financial services products through its three lines of business: commercial, retail and wealth management. The Company’s strategic operating markets are in Ohio, Indiana and Kentucky where it operates 136 banking centers. Additional information is available at

bankatfirst.com

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