A new survey from UBS revealed that US businesses are now pulling back on growth plans, including hiring and investments, due to the US-China trade war.
The survey indicated that the percentage of businesses planning to increase hiring initiatives has toppled from 46% to 25% while companies planning to boost their investments have declined from 36% to 24%. The numbers will worsen if the trade war continues as results show that only 13% of businesses are willing to increase hiring, while only 11% will continue to increase business investment.
According to Mike Ryan, chief investment officer of UBS Global Wealth Management in the Americas, the survey demonstrates a shift in US businesses view on growth plans as it was the first time plans to reduce hiring efforts have been discussed by owners. He added “They’re more concerned and cautious. I think we’re starting to reach that inflection point for business owners that you have to take seriously.”
The UBS survey was conducted from August 28 until September 3 among 500 business owners with at least $250,000 in annual revenue and one employee. It also revealed that 67% of business owners believe that the trade war has negatively affected the US and global economies while 24% said their businesses were negatively impacted as well.
Daniel Zhao, senior economist at Glassdoor, said “While the trade war has put pressure on businesses in manufacturing and transportation, the latest round of tariffs could spill over to the consumer at a time when consumer spending is the tentpole propping up economic growth. We’ll be keeping a close watch on the impact of the trade war on hiring and recruiting.”
The survey also discovered that almost half of the owners want President Donald Trump to de-escalate the trade war while still winning some trade concessions from China while one third wants Trump to continue pressuring China. Ryan added “There seems to be a little bit less patience on the part of business owners to kind of see the trade conflict through.”