Tuesday, February 09, 2010

NFIB: Small Business Owners Report "shortage of customers"

by Bill McBride on 2/09/2010 08:52:00 AM

From Reuters: Dark clouds hang over U.S. small businesses: survey

The outlook of small business owners remained bleak at the start of the new year, according to a survey released on Tuesday by the National Federation of Independent Business. ... But the group also said that seven of the index's 10 components rose, indicating conditions could soon improve. Better outlooks on jobs, inventories and capital spending have helped push the index up 1.3 points since December, the group said
And a few excerpts from the report:
The National Federation of Independent Business Index of Small Business Optimism improved slightly in January to 89.3, 1.3 points above December's reading. January's index is 8.3 points higher than the survey's second lowest reading reached in March 2009 (the lowest reading was 80.1 in 1980). But optimism has clearly stalled in spite of the improvements in the economy in the second half of 2009. The quarterly Index readings have been below 90 for 7 quarters, indicative of the severity and pervasiveness of this recession.

"Small business owners entered 2010 the same way they left 2009, depressed," said William Dunkelberg, NFIB chief economist. "The biggest problem continues to be a shortage of customers."
...
Owners reported workforce reductions that average .52 workers per firm, basically unchanged for the past several months. Nine percent of the owners increased employment by an average of 3 workers per firm, but 19 percent reduced employment an average of 3.9 workers per firm (seasonally adjusted).

... still more firms planning to cut jobs than planning to add.
And the number one problem:
"The biggest problem continues to be a shortage of customers." ... Only 5 percent of the owners reported "finance" as their number one business problem (up one point).
It appears that small business hiring has been very weak during the current "recovery", and this survey suggests the reason is weak end demand, a "shortage of customers".

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