Tuesday, May 14, 2013

Small-business owner confidence rose in April

After a drop in small-business confidence last month, the April Index of Small Business Optimism rose 2.6 points to 92.1, just above the recovery average of 90.7, according to a report from the National Federation of Independent Business released Tuesday. 

And yet, far more of the business owners surveyed still said they expect conditions to be worse in six months. 

“Small-business confidence saw an uptick this last month, but it was a ho hum, yawn, at-least-it-didn’t-go-down reading," said NFIB chief economist Bill Dunkelberg in a statement. "The sub-par recovery persists for the small business sector.” 

Corporate profits, on the other hand, are at record levels and the stock market hit new highs, Dunkelberg said.

Courtesy of the NFIB
The 1,873 business owners (all NFIB members) who responded to the survey in April were asked to identify their top business problem: 23 percent cited taxes, 21 percent cited regulations and red tape and 16 percent cited weak sales. 

Only 2 percent said financing was their top business problem. A quarterly break-out of top business problems by sector will be released next week. 

Here's a summary of business responses in various areas: 
  • Job creation: Positive, but lackluster. Small employers reported increasing employment in April by an average of 0.14 workers per firm -- a bit lower than March's reading. Six percent of respondents said they plan to increase total employment. 
  • Hard-to-fill job openings: Forty-nine percent of owners surveyed said they hired or tried to hire in the last three months. Of those trying to hire, 38 percent said there were few or no qualified applicants for their open positions. 
  • Sales: There are still more firms reporting declines in the first quarter of 2013 than those reporting gains. But the net percent of all owners is smaller than it was in March (-4 percent in April, versus -7 percent in March.)
  • Earnings and wages: Only 19 percent of small employers reported raising compensation. Three percent made reductions in worker compensation. 
  • Credit markets: Of the respondents, 31 percent said all their credit needs were met. Fifty percent said they did not want a loan. Only six percent reported that their credit needs were not met, only two points above the record low.
  • Capital outlays: The frequency of reported capital outlays over the last six months fell 1 point to 56 percent, after rising steadily in small increments since January. Twenty-three percent have capital outlays planned for the next three to six months, a decrease of two points. 
  • Question of expansion: Only four percent of respondents said the current period was a good time to expand -- a historically very weak number, unchanged from last month. Of those who said it was not a good time to expand, 62 percent cited economic conditions and 24 percent cited the political climate. 
  • Inflation: Twenty percent reported price increases (up two points) and 15 percent reported reducing their average selling prices in the past three months (down two points). Looking at the next few months, 21 percent plan to raise average prices and three percent plan reductions -- both unchanged from March's report.
Download the complete report here