Business Leaders Outlook 2019
The 2019 Business Leaders Outlook gives insight into the current business environment and the challenges facing middle market companies.

2019 Business Leaders Outlook

OPTIMISM CONTINUES, WITH SIGNS OF CAUTION

As the current economic expansion stretches to a full decade and companies feel the benefits provided by last year’s corporate tax cut, our ninth annual survey of middle market executives reveals the majority have a firmly positive outlook for their own businesses and the US economy in 2019.

However, trade policy worries, coupled with softer economic trends outside the US, appear to be causing a decidedly more subdued international outlook. Only 39 percent of middle market executives feel optimistic about the global economy over the next year, which is significantly lower than the portion of respondents who feel optimistic toward the national (73 percent) and local (70 percent) economies.

As businesses look to expand, international trade policy is joined by the limited supply of talent and disruptive technologies as potential obstacles to overcome on their path to growth in 2019.

OUTLOOK FOR 2019

Optimistic Neutral Pessimistic
Global economy 2015 2016 2017 2018 2019 39 % 30 ppts 11% 50% 39%
National economy 2015 2016 2017 2018 2019 73 % 16 ppts 7% 20% 73%
Local economy 2015 2016 2017 2018 2019 70 % 5 ppts 7% 23% 70%
Industry performance 2015 2016 2017 2018 2019 69 % 6% 25% 69%
Company performance 2015 2016 2017 2018 2019 2% 14% 84% 84 % 1 ppt
This arrow compares year-over-year figures
Denotes no change in year-over-year figures
Quotation marks

Businesses continue to feel positively about growth opportunities, but there’s some caution growing.”

John Simmons, Head of Middle Market Banking & Specialized Industries, Commercial Banking

Employment

TENSION IN THE TALENT GAP

A majority of executives expect higher revenue/sales (81 percent) and profits (74 percent) in 2019, and employment plans are following suit to keep up with business demands.

66%
▲ 2 ppts
Plan to increase
full-time
personnel
80%
▲ 4 ppts
Plan to
increase
compensation
82%
▲▼
Cite sales growth
expectations as
their reason to
increase hiring

For years our survey has tracked the limited supply of talent as a steadily rising issue for middle market companies, but for the first time it ranks as the top business challenge for the year ahead— surpassing even the perennial No. 1 concern of growing revenue and sales.

60%
▲ 6 ppts
Limited supply
of talent
53%
▼ 10 ppts
Revenue/
sales growth
53%
▲ 3 ppts
Managing
labor costs

Indeed, 54 percent of executives are extremely or very concerned about finding employees with the right skill set, with fewer applicants cited as the leading reason for the shortage.

Positions that require technical or trade skills are the most difficult to fill.

58%
Technical/trade positions
41%
Unskilled labor
38%
Professional positions

To compete in the tightest US labor market since the 1960s, most companies are making changes to attract and retain talent.

69 % Increasing compensation
47 % Improving benefits
40 % Providing flexible hours
Quotation marks

Trade tensions are likely influencing the outlook on the global economy, whereas the US is riding the tailwinds of a big stimulus from last year’s tax reform. It’s a fear of the unknown—and that can quickly fade if both the US and China decide to dial down the noise around trade.”

Jim Glassman, Head Economist, Commercial Banking

Global trade

UNCERTAINTY OVER TRADE POLICY

When asked about the impact of governmental policies and regulations, executives cited trade policy as second-most concerning after healthcare regulation—a notable change from previous years of our survey when it didn’t make the top three regulatory or policy concerns.

47%
3 ppts
Healthcare
regulation
35%
14 ppts
International
trade policy
32%
2 ppts
Fiscal
policy

More than a third of middle market executives are extremely or very concerned over trade policy’s impact on business growth, and that concern is significantly higher among globally active respondents.

Key:
Extremely concerned
Very concerned
Somewhat concerned
A little concerned
Not at all concerned
Globally active companies
23%
28%
21%
14%
14%
Domestic-only companies
7%
12%
18%
18%
45%
65%
Are concerned about
the impact of tariffs
25%
Are concerned about
issues related to
business with China
Quotation marks

Executives are a bit less optimistic about the future and more concerned about trade policy—specifically tariffs—but that doesn’t mean their growth overseas is slowing. We continue to see companies that are global stay committed to further expansion abroad.”

Morgan McGrath, Head of International Banking, Commercial Banking

Sewing supplies

ADAPTING TO EMERGING TECHNOLOGY

As innovation changes the way business is done across nearly every industry, 43 percent of middle market executives say their companies are at least somewhat vulnerable to disruptive technology.

Not at all vulnerable Somewhat vulnerable 32 % Slightly vulnerable 43 % Quite vulnerable 10 % 14 % Extremely vulnerable 1 %

Among businesses that feel susceptible to disruption, three-quarters have already taken action to prepare themselves

Quotation marks

While emerging technologies can remake industries, we're also hearing from middle market companies that are cognizant of the ways in which technology can make them more efficient and better prepared for future challenges.”

Melissa Smith, Head of Specialized Industries, Commercial Banking

Metals

ABOUT THE SURVEY

In its ninth year, the Business Leaders Outlook survey provides a snapshot of the current business environment, the trends influencing that environment and the decision-making of the executives who operate in it.

The results are based on the responses of 817 senior executives from middle market companies with annual revenues between $20 million and $500 million in various industries across the country. This year’s survey was conducted from November 8 to 21, 2018. For year-over-year trends, current data is compared to data collected in the first quarter of previous years.

Who took the survey 14 % 39 % 27 % 17 % 3 % CEO/ Chairman CFO Owner President Other
18 % 32 % 30 % 20 % Midwest South Northeast West Where companies are based
Company size by number of employees
14%
1 to 49
15%
50 to 99
26%
100 to 249
18%
250 to 499
13%
500 to 999
12%
1,000 to 4,999
2%
5,000+
The results of this online survey are within statistical parameters for validity, and the error rate is plus or minus 3.36 percent at the 95 percent confidence interval.

OUR EXPERTS

JIM GLASSMAN

JIM GLASSMAN

Head Economist
Commercial Banking
MORGAN MCGRATH

MORGAN MCGRATH

Head of International Banking
Commercial Banking
John Simmons

JOHN SIMMONS

Head of Middle Market Banking
& Specialized Industries
Commercial Banking
MELISSA SMITH

MELISSA SMITH

Head of Specialized Industries
Commercial Banking
Outlook
Employment

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