Mid-Size Firms Expect Higher Profits, More Borrowing: Poll

By | June 29, 2011

Nearly two-thirds of mid-size U.S. companies expect higher profits in the next 12 months, and many plan to borrow more and increase hiring and investment, according to a survey by JPMorgan Chase & Co.

The survey highlights one of the few areas of the U.S. economy that is relatively strong now: mid-size companies. Banks are expected to report in the coming weeks that such companies are among the few types of borrowers that have increased their demand for loans recently.

In a national survey in May of financial executives from nearly 700 companies with annual revenues of $10 million to $500 million, 62 percent said they expect higher profits, JPMorgan said on Wednesday.

Half plan to hire additional full-time employees, and 42 percent said they will increase capital spending.

Only 4 percent expect even moderate cuts in their full-time workforces, the bank said.

“These companies are becoming more optimistic,” said Anthony Chan, a JPMorgan economist who worked on the survey. The executives’ plans to invest and hire should give the economy a needed boost, Chan said.

That optimism does not necessarily carry over to the broader economy: While 72 percent of those surveyed said they expect their companies’ revenues to grow, only 39 percent said they are optimistic about the national economy.

The survey found 40 percent of companies plan to borrow more in the next 12 months, while 7 percent said they will borrow less. The figures are similar to those in the two most recent Federal Reserve quarterly surveys of senior bank lending officers. The Fed found increasing loan demand since September from companies with more than $50 million of annual revenues.

At JPMorgan, for example, loans outstanding to mid-size borrowers were up 13 percent in the first quarter from a year earlier, while loans to larger business rose only 1 percent and loan balances declined on credit cards and on commercial and residential real estate.

(Reporting by David Henry; editing by John Wallace)

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