10 September 2013 16:49 [Source: ICIS news]
WASHINGTON (ICIS)--Sales, profits and employment among US small business owners have fallen sharply, a key survey reported on Tuesday, but the nation’s grass-roots companies are nonetheless more confident of higher sales and more hiring ahead.
In its monthly survey of small business optimism, the National Federation of Independent Business (NFIB) said that overall confidence levels eased marginally lower in August, dropping 0.1 of a percentage point from July’s measure to a reading of 94.
The federation said that the percentage of small business owners reporting higher sales over the last three months fell by 17 points to a minus 24% - the second-deepest monthly decline in the NFIB survey history.
In addition, earnings and profits among small business owners fell 13 points in August from July to a negative 35%.
In August, said NFIB, only 7% of surveyed small business owners described the current US economy as a good time to expand, a level that is two percentage points below the July reading.
And the percent of owners expecting better business conditions in six months also fell in August, down by four points from July to a negative 10%.
But in what NFIB chief economist Bill Dunkelberg described as “a rather perplexing set of statistics”, more small business owners reported that they expect sales to improve and consequently plan to hire more workers in months ahead.
“The net percent of owners expecting higher real sales volumes surged eight points in August to 15% of all owners,” Dunkelberg said, marking a new high in this category since the recession.
Although still low, the percentage of small operators who plan to increase hiring rose seven points in August from July to a reading of 16%.
“We saw some interesting things with the [data] this month,” Dunkelberg said, which were “internally consistent on some dimensions, such as lower sales bringing lower profits, but contradictory in other ways such as lower job openings but huge gains in hiring plans”.
He said that overall the near-term future for small business owners is highly uncertain.
Dunkelberg said that upcoming deadlines for implementation of President Barack Obama’s sweeping healthcare programme, fading prospects for federal tax reform and continuing uncertainties about the federal budget are weighing on small business owners, making planning difficult.
All things considered, he said, “clarity over our economic direction is not likely” in the months ahead.
The well-being and confidence levels of the US small business sector are important because those entities - typically firms with 500 or fewer employees - account for 64% of the new jobs generated in the economy.
The NFIB represents some 350,000 ?xml:namespace>
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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