~ Monthly survey shows small-business confidence in the future of the economy at a six-month low ~
TALLAHASSEE, Sept. 13, 2011 – Small-business owners in
Florida and across the country continued to lose confidence in the
economy last month, according to the National Federation of Independent
Businesses' latest Small-Business Optimism Index survey.
The monthly report, released today, shows that small-business optimism fell 1.8 points, settling at a low 88.1.
“This survey echoes what we’ve been hearing from small-business owners
across Florida throughout most of 2011,” NFIB/Florida Executive Director
Bill Herrle said. “They’ve been promised economic recovery, but small
businesses have only been hindered by the federal government and a
continued lack of sales. They still have very little confidence and it’s
discouraging them from making long-term financial commitments, like
expanding and hiring workers.”
Herrle pointed out that President Obama’s jobs speech last week did little to help.
“The jobs plan outlined last week contained some modest elements that
we think are positive,” Herrle said. “But there is a great deal of
uncertainty among small businesses thanks to the threat of higher taxes
and the thousands of pending federal regulations. The president’s speech
did little to ease those concerns.”
The Index has now been in decline for a full six months. August’s
decline follows the debt ceiling debate, suggesting a small business
“vote of no confidence” in the agreement reached in Washington.
“The results of this month’s survey are very telling,” said NFIB Chief
Economist Bill Dunkelberg. “The tumultuous debate over the nation’s debt
ceiling and a dramatic 11th hour ‘rescue’ by lawmakers did nothing to
improve the outlook of job-makers.
“In fact, hope for improvement in the economy faded even further
throughout the month, proving that short-term fixes will not help,”
Dunkelberg said. “Private sector decision makers think longer term and
they don’t like what they see. There is little clarity or certainty.”
The results of this month’s survey provide a window into how the debt
ceiling debate impacted the outlook of the small-business community. The
July survey interviews were taken as the issue was debated; and the
Administration’s debt ceiling deal was announced just as NFIB mailed its
first wave of interviews for the August survey.
The resulting Index was one of the largest declines in owner optimism
posted in the last six months. Expectations for real sales gains and
improved business conditions account for most of the decline in the
Index. The four components in positive territory eased some of that
loss, although not by much, landing the Index at a 1.8 point loss.
Some other highlights of August’s Optimism Index include:
• Sales remain the largest problem for small firms—a full quarter identifying “poor sales” as their top business problem.
The net percent of all owners (seasonally adjusted) reporting higher
nominal sales over the past three months lost 1 percentage point,
falling to a net negative 9 percent, with more firms with sales trending
down than up. Not seasonally-adjusted, 27 percent of all owners
reported higher sales (last three months compared to prior three
months), down 2 points from the prior month, while 28 percent reported
lower sales (unchanged). Expectations for future sales are also in
decline, with the net percent of owners expecting higher real sales
falling 10 points in August, to a net negative 12 percent of all owners
(seasonally adjusted), 25 points below January’s reading. Not seasonally
adjusted, 21 percent expect improvement over the next 3 months (down 6
points) and 34 percent expect declines (up 7 points). Owners appear to
have lost confidence in the economy and the government’s ability to
assist the recovery.
• The net percent of owners expecting better business
conditions in six months was a negative 26 percent, down 11 points from
July, and 36 percentage points lower than January.
A negative 12 percent of all owners expect improved real sales volumes,
25 points worse than January. Only five percent characterized the
current period as a good time to expand facilities (seasonally
adjusted), down 1 point and 3 points lower than January. Of those
reporting higher profits, 45 percent credited higher sales and 5 percent
each credited lower materials cost and higher selling prices. Of those
reporting negative sales trends, 45 percent blamed faltering sales, 5
percent higher labor costs, 15 percent higher materials costs, 3 percent
insurance costs, 8 percent lower selling prices and 10 percent higher
taxes and regulatory costs.
• The frequency of reported capital outlays over the past six
months rose 2 points to 52 percent of all firms in August, the first
improvement in many months.
Of those making expenditures, 36 percent reported spending on new
equipment (unchanged), 20 percent acquired vehicles (up 3 points), and
13 percent improved or expanded facilities (up 1 point). Five percent
acquired new buildings or land for expansion (unchanged) and 10 percent
spent money for new fixtures and furniture (unchanged). The percent of
owners planning capital outlays in the next three to six months rose 1
point to 21 percent, a recession level reading that has typified the
recovery to date.
• Over the next three months, 11 percent plan to increase
employment (up 1 point), and 12 percent plan to reduce their workforce
(up 1 point), yielding a seasonally adjusted 5 percent of owners
planning to create new jobs, a 3 point gain over July.
Job creation saw minimal improvement from the previous month. Owners
reported reducing employment an average of 0.08 workers per firm over
the past few months. This was an improvement from June’s -0.23 workers
per firm and July’s -0.15, but still a poor showing. Fifteen percent
(seasonally adjusted) reported unfilled job openings, up 3 points,
suggesting that the unemployment rate could ease a fraction or remain
unchanged.
Today’s report is based on the responses of 926 randomly sampled small
businesses in NFIB’s membership, surveyed throughout the month of
August. Download the complete study at http://www.nfib.com/sbetindex.
###
NFIB’s Small Business Economic Trends is a monthly survey of
small-business owners’ plans and opinions. Decision makers at the
federal, state and local levels actively monitor these reports, ensuring
that the voice of small business is heard. The NFIB Research Foundation
conducts some of the most comprehensive research of small-business
issues in the nation. The National Federation of Independent Business is
the nation’s leading small-business association. A nonprofit,
nonpartisan organization founded in 1943, NFIB represents the consensus
views of its members in Washington, D.C., and all 50 state capitals.
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