Small-Business Owner Roller Coaster Continues

“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 NFIB 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 percent and the unemployment rate is 7.5 percent. 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. The lack of leadership in Washington and the resulting uncertainty depresses consumers’ and business owners’ willingness to spend and invest, and make bets on the future.”

Owners were asked to identify their top business problem: 23 percent cited taxes, 21 percent cited regulations and red tape and 16 percent still cited weak sales. Only 2 percent reported financing as their top business problem. Other highlights include:

• • Job Creation. April was another positive, albeit lackluster month for 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. Job creation plans rose 6 points to a net six percent planning to increase total employment.

• • Hard to Fill Job Openings. Forty-nine (49) percent of owners surveyed hired or tried to hire in the last three months and 38 percent (78 percent 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. Sales expectations improved 8 points from March to a net four percent.

• • Earnings and Wages. Earnings trends have been on an upward trajectory but were unchanged in April, holding at a net negative 23 percent. Nineteen percent of small employers reported raising compensation and three percent reported reductions in worker compensation, yielding a net 15 percent reporting higher worker compensation (down 1 point from March). A net nine percent of owners plan to raise compensation in the coming months.

• Credit Markets. Thirty-one (31) percent of owners reported that all their credit needs were met; 50 percent explicitly said they did not want a loan (63 percent 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, down 1 point and only 2 points above the record low.