Business Survey: Hiring Outlook Sours. (PRNewsFoto/PNC Financial Services) PITTSBURGH UNITED STATES

- PNC Survey Reveals Record Lows in Optimism for U.S. and Local Economies -

    PITTSBURGH, April 3, 2008 /PRNewswire-FirstCall/ -- Despite lower
interest rates and adoption of the federal fiscal stimulus plan, the
outlook among the nation's small and mid-sized business owners has fallen
to record lows in the six-year history of the PNC Economic Outlook survey,
according to new findings.

    (Photo: http://www.newscom.com/cgi-bin/prnh/20080403/NETH021 )

    Only 6 percent of business owners are optimistic about the U.S. economy
over the next six months, a record low for the semiannual survey that began
in April 2003. An unprecedented 19 percent also expect their profits to
decrease in the near term. Asked about their top concerns, the possibility
of recession is No. 1, chosen by 36 percent, while higher energy prices are
second (30 percent).

    The national economy's woes are beginning to significantly impact the
outlook for small and mid-sized businesses, according to PNC's new spring
findings. The survey gauges the mood and sentiment among small business
owners, who represent the bedrock of the American economy.

    "The inherent optimism we have found among these business owners is
absent in these new findings, reinforcing our view that the U.S. economy is
falling into a short and shallow recession for the first half of this
year," said Stuart Hoffman, chief economist for the PNC Financial Services
Group, Inc. (NSYE: PNC).

    Stimulus Plan: Boost Or Bust?

    The majority of owners are also doubtful that the federal fiscal
stimulus plan will boost their business, PNC found. More than six in 10 (63
percent) expect to see "little to no benefit" from the package. Regionally,
owners in the Midwest are the most pessimistic as only 8 percent expect to
benefit, followed by the West (11 percent) then Northeast and South (both
19 percent).

    Among the one out of three (35 percent) that expect to see some
benefit, the expectation is higher among owners of wholesale and retail
companies compared to manufacturing and service firms.

    Hoffman countered that the stimulus package, coupled with the Fed's
most recent interest rate cuts and injection of liquidity into the markets,
will be a "fiscal shot of adrenaline to help lift economic and job growth
in the latter half of this year."

    Key Findings: Cost Pressures, Pricing Power

    Consistent with their fears of recession, business owners are less
optimistic about the performance of their company during the next six
months. About one in five (19 percent) expect their profits will decrease
in the near term, a record high for the survey.

    Likewise, one in 10 (10 percent) expect to reduce the number of
full-time employees, while two-thirds (66 percent) say there will be no
change in employment levels over the next six months. PNC also found:



    -- Cost Pressures: Cost pressures remain a concern for the majority, but
       there is less pressure from employee compensation and benefits. Nearly
       two out of three (61 percent) expect to pay higher prices to suppliers,
       which is little changed from our two previous surveys. Only (38
       percent) expect an increase in employee compensation over the next six
       months. Fewer employers (50 percent) are expecting higher healthcare
       costs.

    -- Selling Prices: A stable 43 percent plan to pass along some portion of
       their higher costs in the form of higher selling prices to customers.
       Of those who plan to raise prices, nearly one-quarter (24 percent)
       report favorable market conditions will allow it while three-quarters
       (73 percent) are attempting to preserve profit margins.

    "The outlook for business pricing power remains stable, which
reinforces PNC's forecast that consumer price inflation will slow down in
the latter half of the year, especially as energy and other commodity
prices and the U.S. dollar stabilize," Hoffman said.



    -- Credit Availability:  Nearly one out of five (18 percent) business
       owners -- compared to 10 percent in the autumn -- say it is more
       difficult for them to obtain credit recently than it was three months
       ago. Only one out of seven (14 percent) business owners say that it is
       easier to get credit now. Plans for capital spending have declined
       across a broad range of industries.

    -- House Prices: Nearly half (48 percent) expect house prices in their
       area to decrease during the next 6-12 months compared to 43 percent in
       the autumn. Among those who expect a decrease, a growing amount say the
       decline will have a negative impact on their business, calling for them
       to reduce the number of full-time employees and limit capital spending.

    For complete details of the national and regional findings, along with
a replay of the webinar featuring Hoffman, visit http://www.pnc.com/eos.

    Methodology

    The PNC Economic Outlook survey was conducted between late January and
late February by telephone within the United States among nearly 1,000
owners or senior decision-makers of small and mid-sized businesses with
annual revenues of $100,000 to $250 million. The results given in this
release are based on interviews with 500 businesses nationally, while the
remaining 457 interviews were conducted among businesses within the states
of Maryland, New Jersey and Pennsylvania. Sampling error for the national
results is +/- 4.0 percentage points at the 95 percent confidence level.

    The survey was conducted by Artemis Strategy Group (http://www.ArtemisSG.com),
a communications strategy research firm specializing in brand positioning
and policy issues. The firm, headquartered in Washington D.C., provides
communications research and consulting to a range of public and private
sector clients.

    The PNC Financial Services Group, Inc. (http://www.pnc.com) is one of the
nation's largest diversified financial services organizations providing
consumer and business banking; specialized services for corporations and
government entities, including corporate banking, real estate finance and
asset-based lending; wealth management; asset management and global fund
services.

    This report has been prepared for general informational purposes only
and is not intended as specific advice or recommendations. Information has
been gathered from third party sources and has not been independently
verified or accepted by The PNC Financial Services Group, Inc. PNC makes no
representations or warranties as to the accuracy or completeness of the
information, assumptions, analyses or conclusions presented in the report.
PNC cannot be held responsible for any errors or misrepresentations
contained in the report or in the information gathered from third party
sources. Any reliance upon the information provided in the report is solely
and exclusively at your own risk.

Link to this page:

  

http://www.prnewswire.com/comp/701257.html/
CONTACT:
Patrick McMahon of PNC Financial Services
Group, Inc., +1-412-762-2477, patrick.mcmahon@pnc.com

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