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New Jersey Business and Industry Association Releases 65th Annual Business Outlook Survey

the staff of the Ridgewood blog

Trenton NJ, a year ago, historic inflation resulted in one of the most dismal outlooks from New Jersey businesses in recent memory.

But NJBIA’s 65th annual Business Outlook Survey for 2024, released today, shows a leveling off from the overall negativity from New Jersey’s business community amid a slow retreat from record-setting inflation.

Among the mixed bag of results this year were certain improvements in staffing challenges and how New Jersey compares to other states in multiple categories. But there was also a notable decline in sales and profits in 2023 and outlook for profits in 2024.

“While it’s clear businesses are still struggling with inflation and the increased costs of running their operations, it does appear that last year represented a low water mark that we’re hopefully crawling out from,” said NJBIA President and CEO Michele Siekerka.

“That’s not to say the 2024 outlook is positive overall. There are still many issues our job creators need to contend with, and newer concerns over rising energy costs and mandates. But if our policymakers can be more proactive in improving our business climate, we can move the needle even more in the right direction.”

Following a similar pattern, the business outlooks on the national and New Jersey economy for the first six months of 2024 also were not positive. But they were less bleak than last year, when the 2023 forecast rivaled that of the Great Recession of 2008 and 2009.

Inflation and Affordability 

2023 was a year in which Gov. Phil Murphy signaled he will let a 2.5% Corporate Business Surtax sunset on Jan. 1, 2024. He also signed impactful legislation that will greatly improve New Jersey’s tax treatment of foreign income.

  • When asked if the governor and New Jersey lawmakers have done enough to address business affordability in the past 12 months, only 4% said yes, but 28% said they were unsure.
  • 68% said lawmakers had not done enough to address business affordability. Last year, however, that number was 75%.
  • National factors are still at play: 89% of business owners or executive staff said they were substantially impacted or moderately impacted by inflation in 2023.
  • But those who said they were substantially impacted by inflation decreased from 45% last year to 36% this year.
  • 51% said they were substantially impacted by inflation for supplies and materials, compared to 65% who said the same last year.
  • 40% said they were substantially impacted by inflation for labor costs this year, compared to 48% last year.
  • 43% said they were substantially impacted by inflation for fuel costs, compared to 63% last year.

Energy Costs and EVs 

The 2024 Business Outlook Survey found there were concerns about increased energy costs, both currently and in the future.

Businesses did show a willingness to engage in electric vehicle usage for their operations. But stopped well short of supporting EV mandates.

Among the findings:

“The lesson we can take here is EV usage will grow, as will its accompanying technologies,” Siekerka said. “But New Jersey should let the marketplace dictate that and avoid mandates that don’t allow for appropriate infrastructure or affordability in a too compressed timeframe.”

Profits  

From 2012 to 2019, most New Jersey businesses reported more gains than losses in the NJBIA Business Outlook Survey.

But that all changed during the pandemic year of 2020, and the climb from that hole continues as follows:

“Small businesses face considerable headwinds when trying to make a profit,” Siekerka said. “This is why NJBIA uses a mantra to Trenton lawmakers that ‘every dollar counts’ when informing on policy.”

Staffing 

  • A year ago, 70% of respondents said they were challenged to find appropriate staffing. But in 2023, only 55% said they had that challenge.
  • Respondents were asked to list the top three factors leading to those staffing challenges, with the following results:
    • Not enough candidates or applicants to fill open positions (76%)
    • Candidates lacked the required skills or qualifications (67%)
    • Unable to provide the requested compensation or benefits (34%)
    • Faster-than-typical employee turnover (20%)
    • Unable to provide requested hybrid/remote work arrangement (16%)
    • Candidates lacked sufficient access to childcare services (8%)
    • Greater-than-typical number of employee retirements (8%)

Employment 

New Jersey businesses continued to see an incremental rebound in hiring levels in 2023.

Wages

Efforts by New Jersey employers to increase wages are continuing.

NJ Competitive Levels

This is typically an area of the survey where the state struggles. But there are a few bright spots and improvements to be found.

  • 48% rate the quality of New Jersey public schools to be better than other states. That’s a bump up from 45% last year.
  • 29% said the quality of New Jersey’s workforce was better than other states. That’s up 2 percentage points from last year and 8 percentage points from 2021.
  • 24% said New Jersey is better at protecting the environment than other states.
  • For the second straight year, 34% said New Jersey was a worse place to live than other states. In 2021, however, that number was 46%.
  • 15% said the state does a better job in promoting economic development. That’s up from 11% last year.
  • New Jersey continues to struggle in many areas tied more directly to business, including:
    • 83% said New Jersey was worse than other states for taxes and fees
    • 67% said New Jersey was worse than other states in controlling government spending
    • 63% said New Jersey was worse than other states in controlling health care costs
    • 60% said New Jersey was worse than other states in controlling labor costs
    • 57% said New Jersey was worse than other states for the cost of regulatory compliance

“These are great areas for policymakers to focus on to make New Jersey more competitive and affordable,” Siekerka said. “These are the kitchen table areas for New Jersey businesses.”

NJ’s Economic Climate and Challenges 

  • When asked about the current business conditions in their industry:
    • 29% said they were experiencing a slowdown (5 percentage points more than last year)
    • 17% said they were experiencing an expansion
    • 10% said their industry was moving from a slowdown to a recovery
    • 7% said they were moving from an expansion to a slowdown
    • 37% said conditions in their industry were staying the same

Economic Outlooks  

The economic outlooks for both New Jersey and the nation were very dismal a year ago. This year, the outlooks have improved, but are still negative overall.

Sales 

Purchases and Prices 

The slightly improved take on inflation in 2023 resulted in the reduction of price increases for the year.

  • 61% said prices for their products and/or services increased in 2023 (10% increased substantially, 51% increased modestly). That’s compared to 70% who claimed an increase in products and services in 2022. Only 3% said they decreased prices this year.
  • 37% are expecting to increase the dollar value of their purchases in 2024 and 20% are anticipating a decline. That’s a net positive of +17%, but 13 percentage points lower than the outlook for 2023.
  • In 2023, 61% of businesses said they made investments in productivity. That continues a positive trend of 55% in 2022, 54% in 2021 and 50% in 2020, and just about matches the mark from the pre-pandemic years of 2019 (62%), 2018 (61%) and 2017 (60%).

About the Survey: Questions for NJBIA’s 65th Annual Business Outlook Survey were sent to New Jersey business owners and executive staff in September and October 2023. The report is based on 503 valid responses. Most respondents were small businesses, with 61% employing 24 or fewer people. 

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