August 12, 2004 -- Business owners remain generally upbeat about the prospects for their companies, despite a softening opinion of the economy.
A study released on Monday showed that business optimism, while still strong, dropped compared to earlier this year. The Grant Thornton Business Optimism Index -- an aggregate of economic outlook, business growth, and employment -- fell last month to 74 from a high of 76 in January. The index is part of the biannual Grant Thornton Survey of U.S. Business Leaders, which polls more than 300 executives.
According to the survey, 54 percent of business leaders expect to hire more employees in the next six months, up from 52 percent in January. During the next six months, 73 percent expect the U.S. economy to improve, compared with 83 percent who felt the same in January. Nine out of 10, however, remain optimistic about their own businesses' growth.
"Although optimism is not at an all time high, these business leaders are building upon the momentum they have created for their businesses over the past year and looking to hire new talent to execute their strategic plans," said Grant Thornton's John Desmond in the report.
The survey found that 52 percent of business leaders believe margin pressures have increased compared to a year ago, with the major drivers including pressure from clients to keep costs down and rising health-care and employment-related costs.
Fifty-eight percent of survey respondents also indicated that businesses are bearing increasing responsibility for their customers' success. In response, the majority of companies are helping clients with such services as product implementation, identifying cost-saving opportunities, and providing ongoing training. Eighty percent of those polled said that such measures have strengthened their client relationships.
The study's findings differed somewhat from another survey released this week. The National Federation of Small Business reported yesterday that small business optimism in July reached its highest level since the 1980s. That survey found a rise in the number of small business owners who planned to create new jobs accompanied by improving expectations about the strength of the economy.
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