59% of business owners see the economy improving in the next six months, compared to 42% in Q4 2016

In Q2 2017 we reached out to a group of Business Banking clients to obtain feedback

on the current and near-term outlook for their industries and the overall economy.

In this edition of the Business Economic Outlook Survey, we’d like to share a

summary of those findings.

Key findings:

• Respondents are considerably more optimistic about the economy.

59% see the economy improving in the next six months, compared

to 42% in Q4 2016.

• While optimism is still high among business owners, respondents

remain cautious as 53% have no plans to change their direct

investments in capital expenditures. Additionally, 75% of business

owners are experiencing difficulty finding qualified, experienced

applicants to fill open positions, similar to 74% six months ago.

• Healthcare and tax reform are the top legislative priorities for

business owners, with the cost and complexity associated with

them continuing to be their biggest challenge.

Survey highlights

How do you expect the U.S. economy to perform during the next 6 months?

75% continue to experience difficulty finding qualified, experienced applicants to fill open positions, compared to 74% six months ago

0%

10%

20%

30%

40%

50%

Q4 2016 Q2 2017

Substantiallyimprove

Moderatelyimprove

No change fromcurrent conditions

Moderately deteriorate

Substantiallydeteriorate

3%3% 9%1%

19%

10%

39%

50%

36%

30%

Business Economic Outlook Survey Q2 2017

M&T Business Banking

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65% expect no change to their capital expenditures with the rising rate environment, compared to 58% in Q4 2016

53% see their industry improving over the next six months vs. only 6% in Q4 2016

What are your expectations for your own industry over the next six months?

To what extent do you expect the rising interest rate environment to affect your capital expenditures?

Which of the following best describes your company’s employment plans for the next six months?

Deteriorate No change Improve

12%

52%

36%

42%

53%

6%

0% 20% 40% 60% 80% 100%

Q2 2017

Q4 2016

Decrease No change Increase

0% 20% 40% 60% 80% 100%

20%

22%

65%

58%

15%

20%

Q2 2017

Q4 2016

Decrease work hours of current employees

Hold employment and work hours at current levels

Reduce employment levels

Hire additional workers

Increase work hours of current employees without hiring additional workers

0% 20% 40% 60% 80%

Q2 2017

Q4 2016

4%

4%

51%

54%

10%

11%

34%

30%

100%

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Equal Housing Lender.ABOUT M&T: M&T Bank is a multi-state community-focused bank serving New York, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia and the District of Columbia. Founded in 1856, M&T Bank provides banking, investment, insurance and mortgage financial services to consumer, business and government clients.SURVEY METHODOLOGY: An Internet survey was conducted by M&T during May 2017 among senior managers and owners of small to mid-sized businesses located throughout the Bank’s geographic footprint. A total of 307 responses were received. DISCLAIMER: The survey results have been prepared by the Business Banking Division of M&T Bank and are not a product of any of M&T’s other affiliates, including any of its registered investment advisors. The views herein are provided for informational purposes only and may differ from those of other departments or divisions of M&T Bank and its affiliates. The information is not intended as specific advice or recommendations and should be viewed as merely representative of a broad range of possible outcomes.©2017 M&T Bank. Member FDIC. CS15752 (6/17) mtb.com

In general, what are your plans for managing employee wage and salary increases over the next year?

How significant are the following challenges for your business today?

How important are the following legislative priorities for your business?

51% of businesses rank “Healthcare Reform” as the most important legislative priority for their businesses

29% plan to hold wage and salary structure flat, up from 20% in Q4 2016”

0% 20% 40% 60% 80% 100%

Q2 2017

Q4 2016

Increase by more than 3%

Increase by 2% to 3%

Increase by less than 2%

Hold wage and salary structure flat

9%

13%

36%

41%

26%

26%

29%

20%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

1 (Least Important)

Cost of Labor, Health Careand Other Benefits

Complying withGovernment Regulations

Level of Business Taxes

Hiring and RetainingQualified Employees

Cost of Labor Wage Growth

2 3 4 5 (Most Important)

100%

Health Care Reform

InfrastructureSpending Reform

Tax Reform

Employee LaborLaw Reform

Trade Deal Reform (i.e. NAFTA)

1 (Least Important) 2 3 4 5 (Most Important)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

3