NFIB Members Pessimistic Amid 'Ho Hum' Recovery
WASHINGTON -- The National Federation of Independent Business reports its Index of Small Business Optimism rose 2.6 points in April to 92.1, just above the recovery average of 90.7. Still, pessimism abounds as still far more of those surveyed expect business conditions to be worse in six months than those who think they will be better.
“Small-business confidence saw an uptick this last month, but it was a ho hum, yawn, at-least-it-didn’t-go-down reading. The sub-par recovery persists for the small business sector,” said the NFIB’s chief economist, Bill Dunkelberg. “Economic performance is contradictory -- corporate profits are at record levels and the stock market hits new highs, yet GDP growth for the past six months has averaged about 1.5% and the unemployment rate is 7.5%. Nothing in the NFIB data suggests that the small business half of the economy is expanding other than by an amount driven by population growth and associated new business starts now in excess of terminations.”
NFIB members were asked to identify their top business problem: 23% cited taxes, 21% cited regulations and red tape and 16% still cited weak sales. Only 2% reported financing as their top business problem.
Other findings include:
Job Creation. Small employers reported increasing employment an average of 0.14 workers per firm in April. This is a bit lower than March’s reading, but still the fifth positive sequential monthly gain.
Hard-to-Fill Job Openings. Forty-nine percent of owners surveyed hired or tried to hire in the last three months and 38% (78% of those trying to hire or hiring) reported few or no qualified applicants for open positions.
Sales. The net percent of all owners reporting higher nominal sales in the first quarter of 2013 compared to the fourth quarter of 2012 rose 3 points to a negative four percent, the best reading in 10 months, although there are still more firms reporting declines than those reporting gains.
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Earnings and Wages. Nineteen percent of small employers reported raising compensation and 3% reported reductions in worker compensation. A net 9% of owners plan to raise compensation in the coming months.
Credit Markets. Thirty-one percent of owners reported that all their credit needs were met; 50% explicitly said they did not want a loan (63% including those who did not answer the question, presumably uninterested in borrowing as well). Only six percent of owners reported that all their credit needs were not met.
Capital Outlays. The frequency of reported capital outlays over the past six months fell 1 point to 56%, after rising steadily, albeit by small increments, since January. The percent of owners planning capital outlays in the next months fell 2 points, with a reported 23% planning to make future expenditures.
Good Time to Expand. Only 4% of those surveyed characterized the current period as a good time to expand, unchanged from last month and historically a very weak number. Of those who said it was not a good time to expand, 62% cited “economic conditions” and 24% cited “the political climate.”
Inflation. Twenty percent of surveyed NFIB owners reported price increases and 15% reported reducing their average selling prices in the past three months. Twenty-one percent of owners plan to raise average prices in the next few months, and 3% plan reductions.
The NFIB report is based on the responses of 1,873 randomly sampled small businesses in NFIB’s membership, surveyed throughout the month of April. Download the complete study at http://www.nfib.com/sbetindex.
Published by The Business Journal, Youngstown, Ohio.
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