EMBARGOED UNTIL TUESDAY,
OCTOBER 9, 2012
Cynthia
Magnuson 202-314-2036 (media)
HOLD UNTIL 7:30 A.M. ET Holly Wade
202-314-2022 (research)
WASHINGTON, October 9, 2012 - September was another month
of low expectations and pessimism for the small-business
community, with the NFIB Small Business Optimism Index
losing 0.1 points and falling to 92.8. The recession-level
reading was pulled down by a deterioration in labor market
indicators, with job creation plans plunging 6 points, job
openings falling one point and more firms reporting
decreases in employment than those reporting increases in
employment. Since the commencement of NFIB's monthly
surveys in 1986, the Index has been below 93.0 a
total of 56 times; 32 of which have occurred since the
recovery began in June 2009.
"The election is just weeks away and essentially a
horse-race, and its outcomes would have vastly divergent
policy implications," said NFIB chief economist William
Dunkelberg. "Everyone is waiting to see what happens,
especially small-business owners who have a lot at stake in
the outcome-which could mean higher marginal tax rates and
more deficits, OR lower marginal tax rates and less
government. Small-business owners are reporting that the
political climate is a reason not to expand-second only to
the economy, which is only keeping up with population
growth. And so, in the meantime, owners are in maintenance
mode; spending only where necessary and not hiring,
expanding or ordering more inventories until the future
becomes more 'certain.'"
The outlook for expansion did improve slightly; those who
view the current period as a "good time to expand" gained 3
points, and the number of owners expecting business
conditions to be better in six months gained 4 points,
landing at a net two percent. While the readings are
improved, they are still below historical averages.
There was almost no news for credit markets, where most
owners reported no interest in a loan. Only eight percent
complained that they didn't get all the credit they wanted.
Two percent say credit is their top business problem
compared to 21 percent each citing taxes, regulations and
red tape, and poor sales. Sales and profit trends were
negative with little sign of improvement in the third
quarter.
Some other highlights of September's Optimism Index
include:
• Capital Expenditures: Small-business
owners are still in "maintenance mode," with the frequency
of reported capital outlays over the past six months
falling 4 points to 51 percent. Of those making
expenditures, 34 percent reported spending on new equipment
(down 7 points from the previous month), 16 percent
acquired vehicles (down 5 points), and 14 percent improved
or expanded facilities (unchanged). Four (4) percent of
owners acquired new buildings or land for expansion (down 2
points) and 12 percent spent money for new fixtures and
furniture (unchanged). Overall, there was a substantial
reduction in capital spending activity. The percent of
owners planning capital outlays in the next three to six
months fell 3 points to 21 percent. While the number of
owners who characterized the current period as a good time
to expand facilities went up 3 points (seasonally adjusted)
to seven percent, this is only half of the 14 percent of
owners who said the same in September 2007. The net percent
of owners expecting better business conditions in six
months rose 4 points to two percent after posting a 6 point
improvement last month, albeit still registering a
pessimistic collective view. Not seasonally adjusted, 15
percent expect an improvement in business conditions (up 1
point), and 20 percent expect deterioration (down 4
points). A net one percent of all owners expect improved
real sales volumes.
• Sales: Weak sales continue to be an
albatross for the small-business community. The net percent
of all owners (seasonally adjusted) reporting higher
nominal sales over the past three months was unchanged at a
negative 13 percent, cementing the 17 point decline since
April and affirming weak GDP growth for the second quarter.
Twenty-one (21) percent still cite weak sales as their top
business problem-historically high, but down from the
record 34 percent reached in March 2010. Seasonally
unadjusted, 23 percent of all owners reported higher sales
(last three months compared to prior three months, down 1
point) and 30 percent reported lower sales (up 1 point).
Consumer spending remains weak and high energy costs
continue to "tax" consumer disposable income. The net
percent of owners expecting higher real sales was unchanged
at one percent of all owners (seasonally adjusted), down 11
points from the year high of net 12 percent in February.
The weak reading is unlikely to trigger orders for new
inventory or business expansion. Not seasonally adjusted,
24 percent expect improvement over the next three months
(down 4 points) and 31 percent expect declines (up 3
points).
• Job Creation: Job creation plans showed
that small-business owners created fewer jobs in September
than in the two previous months. Not seasonally adjusted,
10 percent plan to increase employment at their firm (down
3 points), and 11 percent plan reductions (up 2 points).
Seasonally adjusted, the net percent of owners planning to
create new jobs fell 6 points to four percent, a
historically weak reading, especially in a recovery.
Essentially, hiring is keeping up with population growth,
but not exceeding it. Seasonally adjusted, 10 percent of
the owners reported adding an average of 2.2 workers per
firm over the past few months, and 13 percent reduced
employment an average of 3 workers. The remaining 77
percent of owners made no net change in employment.
Fifty-one (51) percent of the owners hired or tried to hire
in the last three months and 41 percent (80 percent of
those trying to hire or hiring) reported few or no
qualified applicants for open positions. The percent of
owners reporting hard to fill job openings fell 1 point to
17 percent of all owners. The only region of the country
that saw any positive job growth was the West North Central
states, largely because of energy production.
Today's report is based on the responses of 691 randomly
sampled small businesses in NFIB's membership, surveyed
throughout the month of September. 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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