Upstate business leaders’ confidence soared in 2014, Siena survey found

CEO confidence across upstate New York in 2014 rose nearly 16 points, with each survey component — current, future, and overall — “well above” 100 in Upstate as a whole and in each of the four regions. 

 

That’s according to the new “Upstate New York Business Leader Survey” that the Siena (College) Research Institute (SRI) has issued in partnership with CNYBJ and other upstate publications.

 

The CEO confidence level reached its “highest point” in the eight years SRI has been measuring it.

 

The survey results are “encouraging,” Donald Levy, director of the Siena Research Institute, says in an interview with CNYBJ.

 

“Getting to a point where there’s more optimism than pessimism does not mean that we’re on Easy Street by any means,” Levy notes. 

 

At 110.4, the overall index is up from 94.6 last year and 88.9 in 2012, according to the SRI data.

 

The overall-confidence index is a combination of the current-confidence and future-confidence components. The CEOs’ current-confidence index of 106.9 is up from 93 last year and 82.9 in 2012. 

 

Their future-confidence index of 113.9 is up from 96.2 last year and from 94.8 in 2012, SRI said. 

 

Each of the four questions that comprise the index — the current assessment of the state’s economy and its impact on CEOs’ industry and their view of the future of the state’s economy as well as their industry prospects — are improved from last year. 

 

Both statewide assessments display considerably more optimism than pessimism while CEOs’ view on their industry conditions are improved, but in the case of current conditions now at a breakeven point.

 

Using SRI’s statistical clustering of CEOs, based on simultaneously considering their views, both current and future, towards the overall state economy and their industry’s current and future prospects, SRI found that 39 percent of CEOs are optimistic (up from 31 percent last year and the highest percentage it has seen in eight years); 44 percent (virtually unchanged from 45 percent) are ‘status quo,’ or they feel as though conditions have stabilized and are likely to remain so; and 16 percent (down from 24 percent) are pessimistic.

 

“The general-business climate, as perceived by these CEOs, is not only the strongest that we’ve seen in eight years, but seems to have a more firm foundation than when we flirted with these … numbers in 2010,” says Levy. 

 

CEO confidence

The views of CEOs in the Syracuse region generated increases in overall, current and future confidence, but recorded the lowest current confidence of the four regions this year. Overall confidence in Syracuse is at 109.9 up 12.5 points from 97.4 last year.

 

Current confidence in Syracuse is 102.6, up from 98.3 a year ago, and future confidence increased 20.5 points from 96.6 to 117.1.

 

While 59 percent of Syracuse CEOs say that the general-business climate locally is staying about the same, 11 percent say that conditions are improving and 30 percent, the highest of the four regions, still think they are worsening. 

 

The CEO of a local construction company counts himself among those who are pessimistic about the local and regional economy. 

 

“We get a lot of talk, smoke, and mirrors from Albany, but at the end of the day, the high taxes, repetitive fees, over regulation, and the anti-business climate in [New York are] killing the local economy,” Jake McKenna, president of Parsons-McKenna Construction Co., Inc., said in an email response to an inquiry from CYNBJ.

 

Using SRI’s cluster grouping of CEOs that simultaneously considers their answers to all four index questions, 37 percent (up from 34 percent) of Syracuse’s CEOs are optimistic; 50 percent (43 percent last year) are ‘status quo;’ and 13 percent (down from 23 percent) are pessimistic. 

 

The overall upstate New York numbers are 39 percent optimistic, 44 percent ‘status quo,’ and 16 percent pessimistic. 

 

The growth in the relative size of the optimistic group is “demonstrative of a widespread increase in confidence and associated increasing projections for revenue, profits, asset acquisition and hiring,” according to the SRI news release.

 

The SRI Business Leader Survey also breaks down the confidence data among industry sectors.

 

Of the five largest industry sectors, confidence is greatest again this year in engineering/construction at 124.7 (up from 113.6 last year); followed by services at 116.3 (up from 89); manufacturing 105.2 (up from 91.4); retail 103.8 (up from 95); and wholesale/distribution 102.5 (up from 82.7), according to SRI. 

 

Not only is confidence up in each area and across every industry but every reading is above 100, an indication that there is more optimism than pessimism, SRI said.

 

CEO assessment of the local market

The survey found 11 percent of Syracuse’s CEOs believing that the general-business climate in the local area is improving, while 59 percent, a majority, say it is staying the same and 30 percent say it is worsening.

 

The 11 percent figure is up from 8 percent last year but below the other three regions’ rate of 26 percent.

 

And when considering the local conditions for their industry across all of Upstate, only 18 percent see improvement while 25 percent sense worsening. The figures represent an improvement over last year. However, when CEOs consider their own industry, they still issue a “more harsh” assessment of the business climate than when addressing the overall economy.

 

Again, fewer Syracuse CEOs express more “intense” optimism than the upstate New York sample with 9 percent saying local conditions for their industry are improving. Greater than the upstate sample, 33 percent say that conditions are worsening. 

 

When asked to name the one industry sector that will have the most positive economic impact locally, CEOs across Upstate name technology and medical at rates of 30 and 26 percent, respectively. 

 

In Syracuse, education takes the top spot at 31 percent, followed by manufacturing at 23 percent. Technology and medical are nearly the same at 17 percent and 16 percent, respectively. 

 

CEO plans for 2015

Across Upstate, SRI says it sees meaningful signs that point to overall growth in sales, profits, business-to-business commerce and hiring this year. CEOs do not see any statewide boom, but rather slow cautious growth.

 

The survey found 49 percent of Upstate’s CEOs expect their revenues to increase in 2015, which is up from 42 percent a year ago. 

 

In Syracuse, 50 percent anticipate increasing revenues, which is up from 43 percent a year ago. More than half, 51 percent, of manufacturing CEOs anticipate increasing revenues.

 

Additionally, 41 percent expect profits to grow this year, which is up “dramatically” from 31 percent a year ago.

 

Profit-growth projections are up in Syracuse, where 45 percent expect increasing profits while only 20 percent anticipate declines. These numbers represent an improvement from last year’s expectations of 36 percent increasing and 32 percent bracing for decline.

 

“Those are all … very encouraging signs for the local market,” says Levy. 

 

Of the major industry sectors, the manufacturing sector anticipates the greatest increase in profits across upstate New York, according to SRI. 

 

The Siena College Research Institute conducted the eighth annual Upstate New York Business Leader Survey, with sponsorship from Troy, N.Y.–based Gramercy Communications and the Business Council of New York State, from Oct. 22 through Jan. 7.

 

SRI interviewed 524 CEOs of private for-profit companies in Buffalo (30 percent), the Capital Region (28 percent), Rochester (28 percent), and Syracuse (14 percent) from industries including: service (23 percent), manufacturing (21 percent); engineering and construction (17 percent); wholesale and distribution (15 percent); retail (12 percent) and smaller samples from both financial and food/beverage.