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Tags: Small | Businesses | Hires | Investments

Small Businesses Grow Wary, See Fewer Hires, Investments

Tuesday, 09 October 2012 09:36 AM EDT

Confidence among U.S. small businesses cooled in September as fewer companies said they planned to hire or invest in new equipment, a survey found.

The National Federation of Independent Business’s optimism index fell to 92.8 from an August reading of 92.9. Four of the 10 components that make up the gauge decreased, the Washington-based group said.

The fourth decline in the past five months for the measure showed business leaders may be putting off some of their hiring and investment decisions because of a lack of clarity on tax and regulatory policy. At the same time, more companies expected better economic conditions in six months, signaling a pickup in sales and employment may take time to develop.

Editor's Note: The Final Turning Predicted for America. See Proof.

Small-business “owners are in maintenance mode; spending only where necessary and not hiring,” William Dunkelberg, the group’s chief economist, said in a statement. “Owners are unwilling to put their own capital on the line until the future path of the economy and economic policy becomes clear.”

A measure of whether business owners plan to add more workers fell by six percentage points to a net 4 percent. The number of respondents who said they planned to invest in equipment dropped three points to a net 21 percent in September.

The world’s largest economy added 114,000 workers last month, the fewest since June, according to a Labor Department report on Oct. 5. The jobless rate dropped to 7.8 percent after exceeding 8 percent for 43 straight months.

Job Openings

The proportion of respondents who said it was hard to fill a job opening dropped to 17 percent in September from 18 percent a month earlier. The number of respondents who expected higher sales held at 1 percent.

A net negative 1 percent planned to increase inventories, also unchanged from August. A net negative 1 percent of small business owners said their inventories were too low, down one point from the previous month.

The survey’s net figures are calculated by subtracting the percent of business owners giving a negative answer from those with a positive response and adjusting the results for seasonal variations.

Companies surveyed said the most important problem facing them in 2012 is the rising cost of healthcare insurance, followed by little foresight into economic conditions, energy costs and government policy.

“I think they’d like some resolution about the path of the economy,” Dunkelberg said in a Bloomberg Radio interview with Tom Keene. “The fiscal cliff is sort of one big issue.” On taxes, “one side is promising they’ll be higher, one side is promising they’ll be lower.”

The NFIB report was based on a survey of 691 small-business owners through Sept. 29. Small companies represent more than 99 percent of all U.S. employers, according to the U.S. Small Business Administration. A small business is defined as an independent enterprise with no more than 500 employees.

Editor's Note: The Final Turning Predicted for America. See Proof.

© Copyright 2023 Bloomberg News. All rights reserved.

U.S. small business sentiment weakened in September for the fourth time in five months as fewer owners expected to add staff and make capital investments.
Tuesday, 09 October 2012 09:36 AM
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