One in four Washington small businesses plan to hire this year

The Washington area job market continues to show signs of sluggishness.

Only about one in four owners of small and mid-size businesses in the Washington area say they plan to hire full-time workers this year, according to a survey released last week by PNC Financial Services Group.

While hardly a groundswell for hiring, sentiment at least appears to be improving. Nationally, 22 percent of owners say they are looking to add employees, a six percentage point increase from last spring.

“Generally, these are the best numbers that we’ve seen since before the recession,” said Augustine Faucher, vice president and senior macroeconomist at PNC Financial Services Group. “Small businesses are generally feeling more upbeat about sales, profit and hiring, and they’re feeling better about the national economy.”

The survey comes as the latest figures showed a net gain nationally of 192,000 jobs for March, although the unemployment rate remains elevated at 6.7 percent. Locally, the picture is a bit darker, economists say, with many businesses bracing for continued federal government budget cuts.

“One of the things about this area, especially around the Beltway, is obviously there’s a strong tie to the federal government,” said Daraius Irani, executive director of the Regional Economic Studies Institute at Towson University. “There is optimism but it’s cautious because a slowdown in spending may have an impact on smaller businesses.”

At The Hour, an Old Town Alexandria store that specialized in vintage barware, owner Victoria Vergason says business has been on a steady climb. Annual revenue is on track to increase 10 percent from last year, when sales totaled nearly $400,000.

If revenue continues to rise, Vergason says, she will probably hire one or two full-time employees to her roster of six. But it’s not a decision she will take lightly.

“I’m doing things very slowly and methodically,” she said. “I’m being very conservative about hiring. The economy may be improving, but things are still on the edge.”

A spate of cold, snowy weather at the beginning of the year, coupled with looming worries about federal budget cuts, has left Washington area business owners less optimistic than their national counterparts, economists say.

Among small and mid-size businesses — defined in the survey as those with between $100,000 and $250 million in annual sales — 25 percent of Washington area owners said they were optimistic about their company’s prospects in the next six months, compared with 37 percent nationally.

At Chocolate Moose, a gift shop in Northwest Washington, 2014 has gotten off to a slow start.

“Business has been absolutely horrendous,” said co-owner Marcia Levi. “The beginning of this year has been the worst in our 36-year history.”

Snow-related closures, including one the day before Valentine’s Day, have pushed down sales 10 percent, Levi said. But there has also been a broader shift, she said. Shoppers are much more cautious than they used to be.

“The economy might be getting better but that doesn’t make the average person think, ‘Oh my gosh, I have so much more money now.’ ” Levi said. “It’s still a struggle.”

About 26 percent of local business owners say they plan to raise pay during the next six months. Nationally, 32 percent said they were planning to dole out raises.

“Admittedly, I’m a bit surprised by the optimism expressed by the local business community,” said Anirban Basu, chairman and chief executive of Sage Policy Group, an economic and policy consulting firm in Baltimore. “Economic momentum in the Washington area has been suppressed recently by sequestration, the weather, the federal government shutdown and by uncertainty regarding public-sector spending generally.”

The survey, based on interviews with 501 small and mid-sized businesses, including 151 in the Washington area, was conducted by District-based research firm Artemis Strategy Group.

Some area businesses, such as Eclectic Nature, a garden store in Alexandria, say it’s too soon to tell whether revenue and profit will rise this year.

“We’ve all had a horrible winter, and as a small company, yes, we did feel the pinch,” said Christine Weaver, one of three full-time employees at the store. “March was pretty much a $0 month. But now we’re having thousand-dollar days. It’s getting better.”

If demand continues to rise, Weaver said, the small shop may hire another full-time employee.

“I really hope so,” she said. “We could definitely use a couple more hands here.”

For more news on region’s job market, go to capbiz.biz.

Abha Bhattarai covers local retail, hospitality and banking for The Washington Post. She has previously written for The New York Times, The Wall Street Journal, Reuters and the St. Petersburg (Fla.) Times.
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