How U.S. Businesses are Navigating the Global Economy

A closer look at the data reveals possible explanations for this apparent inconsistency. The record number of businesses expected to grow their profits is most likely owing to inflation being controlled. This is highlighted by a five-point drop (down to 50%) in the number of businesses expecting to increase their selling prices over the next 12 months.

Every business restriction monitored by the IBR has also reduced, indicating less pressure on margins.

For example, those citing labour costs as a constraint is down two points to 51%, those citing energy costs as a constraint is down two points to 52%, and those citing a shortage of finance is down four points to 40%. Elsewhere, concerns over a shortage of orders has dropped five points to 43%; concerns over red tape and regulation is down four points to 47%; and concerns over availability of skilled labour is down three points to 50%. While these figures have decreased, the majority have decreased somewhat and remain significantly higher than average since the IBR investigation began. However, there is little doubt that the relentless pressure on margins may finally be easing, as seen by a four point drop in the number of businesses expecting to provide real salary increases over the next year (down to just 19%). This may also explain the marginal increase (up one point to 51%) in the number of businesses expecting to increase the number of people they employ. But there is no escaping the gloomy geopolitical landscape. Despite a marginal drop of one point, economic uncertainty remains the most frequently cited constraint, by 57% of mid-market business leaders. That uncertainty has spilled over into a less optimistic outlook for international trade. Business leaders' expectations for increased exports have declined four points to 43%. This is driven by a three point drop (down to 40%) in the number of leaders expecting to increase the number of countries they sell to and a two point drop (down to 42%) in those expecting to increase revenue from non-domestic markets. Perhaps the record number of countries voting in elections and the potential regulatory and geopolitical upheaval that may cause might be tempering the international ambitions of business?

And while profit expectations are up, the one point rise is matched by a one point drop in those expecting to see an increase in revenues over the next 12 months down to 59% of respondents.

This expectation may be flowing through to marginal falls in business investment expectations. However, investment in technology remains top of the list with no change in proportion of leaders (61%) expecting to increase investment in this area. Elsewhere there is a one point drop in investment in staff skills (down to 56%), a two point drop in investment in research and development (down to 52%), no change in investment in plant and machinery at 46%, and a two point drop (down to 36%) in investment in new buildings. Peter Bodin, CEO of Grant Thornton International commented: “Our latest IBR highlights the complexity and difficult choices that business leaders face. Does improving profitability mean an opportunity to focus on growing market share through changes in pricing strategy? Do persistent concerns over economic uncertainty and continuing geopolitical challenges signal a need to prepare for more volatility? And does an improving inflation outlook and falling interest rates mean better financing options? As always, it depends. It depends which market you are in. It depends what condition your business is in. It depends on the competitive landscape in your industry. “Despite lower levels of optimism, it is not all doom and gloom – but neither is it getting any easier to choose a clear path. With the global economy in a lower growth trajectory, the decisions made by business leaders will have a far bigger impact on whether companies are successful or not. As our data highlights – making the right choices is not getting any easier. Navigating these challenges is something we expect clients will continue to need help with.” ends

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Campbell McIlroy Director global communications International Business Report The Grant Thornton International Business Report (IBR) is a survey of mid-market businesses. Launched in 1992, the IBR now provides insight into the views and expectations of around 10,000 businesses across 28 economies. Questionnaires are translated into local languages and fieldwork is undertaken on a biannual basis, through both online and telephone interviews. The data for this release is from interviews conducted between October and November with chief executive officers, managing directors, chairpersons or other senior executives from all industry sectors. Businesses play a key role in driving job growth. This spans a wide range of industries, from local shops and restaurants to multinational corporations with workforces spanning the globe. This diversity in business size and scope contributes significantly to overall employment opportunities. mall businesses have a big impact The majority of businesses in the United States are classified as small. According to the Small Business Administration, over the past 25 years, small businesses have contributed to the generation of 12.9 million new jobs, accounting for roughly two out of every three jobs added to the economy. Medium-sized businesses focus on attracting talent Sometimes referred to as mid-market enterprises, these businesses employ larger numbers of people and are often more specialized. According to a 2023 mid-sized business report from Bank of America, 75 percent of these enterprises plan to expand their operations. Many are offering competitive benefits to attract talent, including increased salaries, enhanced retirement plans, and additional paid time off.