Tuesday, April 9, 2013

NFIB: Small-business confidence headed in wrong direction

National Federation of Independent Business says small-business confidence is "heading in the wrong direction."

Results of the group's latest Index of Small Business Optimism, released Tuesday, show that after three months of sustained growth, small business confidence declined in March.

Since the beginning of the recovery in July 2009, there have been 44 months of economic expansion, and index has averaged 90.7 points. The March reading decreased by 1.3 points.

The greatest declines were in labor market indicators, inventory investment plans and sales expectations.

More than 75 percent of business owners said they expect business conditions in six months to remain the same or worsen.

Though state-specific data isn't available, Gregg Thompson, the North Carolina director of NFIB says small business owners here share many of the same struggles as owners in other states.

"The fact that small businesses aren't hiring, aren't borrowing and aren't expanding, tells us that what's really hurting the economy right now is uncertainty about where things are headed," Thompson said, in a statement.

A near-record-low percentage of small-business owners said credit is their top business problem (three percent). Almost a quarter of respondents said taxes and regulations were their greatest concerns, and 21 percent cited red tape.

Other highlights from today's report:
  • Job creation. Job creation in the small-business sector was practically the only bright spot in the March report. In the fourth consecutive month of positive job growth, owners reported increasing employment an average of 0.19 workers per firm in the month of March. This is the best reading NFIB has recorded in a year, although NFIB economists don't expect the trend to continue. 
  • Hard-to-fill job openings. For the 47 percent of owners who hired or tried to hire in the last three months, 36 percent (77 percent of those trying to hire or hiring) reported few or no qualified applicants for open positions.
  • Sales. The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months was negative 7 percent, an improvement of 2 points and the best reading in eight months. However, firms are still reporting more declines than gains. Seventeen percent of small employers cite weak sales as their top business problem, a one point improvement over February.
  • Earnings and wages. Though positive earnings trends improved three points in the last month, they're still at a negative 23 percent, "a very poor reading," according to the NFIB. However, a seasonally adjusted net 16 percent of owners reported higher employee compensation (up 2 points from last month). 
  • Credit markets. Credit demands stayed weak in March. Forty-nine percent of small business owners said they did not want a loan.
  • Capital outlays. Owners are still in “maintenance mode” when it comes to business investment. The frequency of reported capital outlays over the past six months rose 1 point to 57 percent, rising steadily since January, though by very small amounts. The percent of owners planning capital outlays in the next three to six months was unchanged at 25 percent.
  • Expansion. Only four percent of owners surveyed said the current period was a good time to expand facilities (down 1 point), historically a very weak number. The net percent of owners expecting better business conditions in six months was a net negative 28 percent, unchanged from February, one of the lowest readings in the 40-year history of the NFIB survey. 
  • Inventories: A net negative 6 percent of all owners reported growth in inventories - 3 points better than in February - but there are still more owners reducing stocks than adding to them. 
  • Inflation: There are few opportunities for small-business owners to raise prices. Seventeen percent of the NFIB owners reported reducing their average selling prices in the past three months (up 1 point), and 18 percent reported price increases (down 3 points).

The March report is based on the responses of 759 randomly sampled NFIB member small businesses. Download the complete study here.


Anonymous said...


Anonymous said...

Sounds like it's headed in the RIGHT direction if you ask me.

Maybe reality is finally winning.

NCdirtdigger said...

What? You mean business owners aren't as gullible as the sheep that vote for Obamaphones?

Nicky Ball said...

As a business owner, you should always be on the hunt for new customers and seeking methods to bring them to your door. If you are not consistently looking for opportunities to build your customer base, your business could fall off of the growth track. There are lots of ways to reach your prospects.

Nicey Charie said...

If you think that your business headed in the wrong way. Why not ask for an advice of a business growth consultants. I think it should help. You need an advice of an expert in order to success.