Small businesses struggle in summer months In a survey, small-business owners say sales, job creation and capital-spending efforts are sluggish. NEW YORK (CNNMoney.com) -- Small-business owners said sales, job creation and capital-spending efforts slumped in the second quarter, according to a report released Tuesday by a small-business advocacy group. Despite this slump, the National Federation of Independent Business (NFIB) Small-Business Optimism index actually edged up 1.4 points to 98.1 in July from 96.7 in June. Still, that figure is down from 100.1, where it was at the end of the first quarter. With the uptick in July's optimism, "small-business owners are sending a soothing message, saying they don't expect a downturn in the immediate future," NFIB Chief Economist William Dunkelberg said in a statement. Nevertheless, "inflation resulting from energy, labor and production constraints is slowing GDP growth," and hurting small businesses, he added. Thirty-five percent of small-business owners reported lower second quarter earnings compared to the previous three months, citing weaker sales, higher costs for materials, lower selling prices, more expensive labor and higher insurance costs, as well as higher taxes and higher regulatory costs. Meanwhile, the 25 percent of small-business owners that reported higher earnings, cited stronger sales, higher selling prices and lower labor costs. Fifteen percent of owners hired more workers in July, taking on an average of 3.7 workers per firm, but 10 percent cut employment by 2.6 workers. Eleven percent of respondents reported that the availability of qualified labor was their top business problem, down from 12 percent a month earlier. Overall spending activity slowed slightly in July, according to the survey. Forty-six percent of small businesses spent money on new equipment, while a little over 20 percent acquired vehicles and 14 percent improved or expanded their facilities. Sixteen percent bought new fixtures and furniture while 6 percent acquired new buildings or land for expansion. Looking forward, thirty-one percent of respondents said they planned capital expenditures in the next few months, up from 27 percent a month earlier. Manufacturers were the strongest spenders, while spending by construction firms weakened substantially. The percentage of firms that were raising average selling prices was unchanged at 23, led by manufacturers and construction firms. NFIB's Small Business Economic Trends is a monthly survey of small-business owners. |
|