|
|
WASHINGTON, D.C.– When they were surveyed before the damage from Hurricane Katrina, small-business owners were optimistic that the economy would remain strong, according to the National Federation of Independent Businesses (NFIB) Small-Business Optimism Index. The index was virtually unchanged – down just 0.2 points – in August.
“Katrina does put a wrinkle in the outlook,” NFIB Chief Economist William Dunkelberg said, citing uncertainties about the storm’s impact on energy production and shipping activity. “But the survey data indicate strong third and fourth quarters.”
There were advances in capital spending and job-creation plans in August and labor markets tightened, signaling a declining unemployment rate. But sales and profit gains faded, while owners continued to report increasing compensation for employees. The percent of owners expecting improved real sales outweighed those anticipating declines –usually a sign that the economy will produce more customers – but the net percent of those expecting the economy to improve declined. Such readings are typical of expansions and no cause for concern, the economist said.
|
|
Job creation plans rose strongly to a net 17 percent of all firms, seasonally adjusted, and August employment increases added a net 0.2 employees per firm. In August, 50 percent more owners (now 12 percent of those surveyed) cited the availability of qualified workers as their key business problem than last month.
Capital spending remains solid; outlays over the past six months were unchanged, reported by 61 percent. New equipment purchases were reported by 44 percent, 22 percent bought vehicles, 14 percent improved or expanded facilities, a similar share spent on fixtures and furniture and 5 percent acquired new buildings or land.
Plans to make capital expenditures in the second half of the year gained two points to 31 percent. More than one-fifth believe the present is a good time to expand facilities, up a point from July and historically high.
A net 0 percent of owners reported increasing inventory – as many firms added to stocks as cut them. Solid sales gains have kept inventory accumulation modest for months. Plans to add to inventories fell a point to a net 2 percent. Seasonally adjusted, a negative net 1 percent reported inventories “too low,” even more lean than in July.
The share of firms reporting increased sales volumes quarter-over-quarter fell three points to a net 6 percent, still a solid reading.
In spite of concerns about inflation, the incidence of price hikes continues to fade. Firms are absorbing higher delivery fees and not increasing prices, but the longer energy costs remain high, the more frequently those fees will be passed on, Dunkelberg said.
Reports of higher selling prices fell two points to 27 percent of owners, while one-tenth reported reductions. Seasonally adjusted, that is down two points to a net 18 percent now reporting higher selling prices. Over the past few months, the share reporting higher average selling prices has declined seven points.
Earning gains remain historically solid, even amid weaker sales trends, rising compensation and fewer price hikes. Of the 23 percent reporting higher earnings, 61 percent cited stronger sales and 4 percent each noted lower labor or materials costs and higher selling prices.
For those reporting lower earnings compared to the previous quarter, 35 percent blamed materials costs, 13 percent named reductions in selling prices, 10 percent noted higher labor costs and 6 percent cited insurance costs.
Borrowing activity climbed six points to 40 percent, its highest level since 1989. The net percent of owners reporting loans harder to get in recent months remained historically low, rising one point to a net 5 percent. Only 1 percent cited the cost and availability of credit as their main business problem.