Philly Inc: Could this be that better summer?

Posted: May 29, 2012

As the unofficial start of summer, Memorial Day weekend is usually a hopeful time, with people looking forward to vacations, no school, and a slower tempo in the office.

But recent summers also have brought a spike in oil prices (2008), turmoil in the auto industry (2009), a White House-touted "summer of recovery" (2010), and an unnerving battle over raising the federal debt ceiling (2011).

Through it all, small businesses have hunkered down and waited for their prospects to improve. Could this be the summer?

Several recent surveys indicate creeping optimism among small firms and U.S. consumers, even as a debt hurricane is once again forming in Europe.

On Friday, the Thomson Reuters/University of Michigan Survey of Consumers said that in May, consumer confidence reached its highest level since October 2007 — two months before the U.S. recession began. "Consumer mood is slowly coming out of the ditch," said Yinbin Li, a U.S. economist for the forecasting firm IHS Global Insight.

Also last week, the latest TD Bank Small Business Survey of 500 owners in Maine, Connecticut and New Jersey as well as the Boston and Philadelphia regions found that 74 percent expect to hit or exceed their revenue projections for the spring. That’s up from the 60 percent who’d reported they had done that in the first few months of 2012.

Small-business owners often say that higher sales is the key to their adding jobs. Though 95 percent of the respondents said they plan to maintain or increase staffing over the next three months, only 27 percent indicated they were looking to hire one or more employees. (The telephone survey was conducted in April by Princeton-based ORC International.)

Finally, the National Federation of Independent Business’ Small Business Optimism Index reported May 8 that the reading for April was the highest since December 2007. However, it should be noted that the survey of 1,817 businesses nationwide found fewer firms expecting higher sales. (Maybe we’re just pie-eyed optimists here in the Northeast?)

Nomura economists called the NFIB report "a welcome upside surprise for the U.S. economy."

Still, IHS Global Insight did feel the need to hold a webcast entitled "Another Summer Slowdown — Or Is This Year Different?" mid-month. Its conclusion: Moderate economic growth is expected to continue in the absence of major shocks.

Until Labor Day rolls around, we can hope the only shock we feel comes from cold pool water on a hot summer’s day.

Priority Merger

Banks can be small businesses, too, and a couple of small institutions announced plans to merge last week.

First Priority Financial Corp., of Malvern, will combine with Affinity Bancorp Inc., a smaller Berks County bank holding company, in a stock transaction.

First Priority, which has six branches with total assets of $279.7 million as of March 31, will merge with Affinity, a Wyomissing institution with five branches and $176.5 million in assets. According to a statement, the result will be a financial institution with $450 million in assets, $335 million in loans, and $390 million in deposits.

The two sides are calling the deal a "merger of equals," but First Priority shareholders would wind up owning 62 percent of the new holding company, which intends to retain the First Priority name and remain based in Malvern. The 12-member board would include six from First Priority, four from Affinity, and two players to be named later.

Contact Mike Armstrong at 215-854-2980 or, or @PhillyInc on Twitter. Read his blog, "PhillyInc," at

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