Small-business employment is better than it was a year ago, but not
enough to restore 2007-level hiring. Uncertainty remains throughout
the sector, as small-business owners brace for the possibility of
increased taxes, new regulations and higher health-care costs.
State-specific data isn't available, but Kim Clarke Maisch, state
director of NFIB/Illinois, said small-business owners here are as
wary as those elsewhere in the country. "The numbers could be worse,
but they should be a lot better," she said. "We're still not back
where we were before the recession, and there's a lot of uncertainty
among small-business owners over where the economy is headed."
Bill Dunkelberg, NFIB's chief economist, said: "The year is not
ending on a high note in the small-business sector of the economy.
The 'bifurcation' continues, with the stock market hitting record
high levels but the small-business sector showing little expansion
beyond that driven by population growth.
"There is also a hint that employers are getting an inkling of
what Obamacare might mean for labor costs. Concern about the cost
and availability of insurance bumped up 3 percentage points after a
long period of no real change. Small-business owners who provide
health insurance may soon find that their plans are 'unacceptable'
to Obamacare and be obliged to either pay more for the coverage or
abandon it and pay the benefit in cash. This will be a major source
of angst and uncertainty in 2014."
A review of the November indicators is as follows:
NFIB owners increased employment by a seasonally adjusted
average of 0.05 workers per firm in November, which is half the
October figure, but positive. Seasonally adjusted, 14 percent of
the owners, up 2 percentage points, reported adding an average
of 3.7 workers per firm over the past few months. Offsetting
that, 12 percent, up 3 points, reduced employment an average of
3.4 workers, producing the seasonally adjusted gain of 0.05
workers per firm overall. The remaining 74 percent of owners
made no net change in employment. Fifty-one percent of the
owners hired or tried to hire in the last three months, and 44
percent reported few or no qualified applicants for open
Twenty-three percent of all owners, up 2 points,
reported job openings they could not fill in the current period
— a positive signal for the unemployment rate and the highest
reading since January 2008. Thirteen percent reported using
temporary workers, down 2 points from October.
seasonally adjusted net percent of all owners reporting higher
nominal sales in the past three months compared with the prior
three months was unchanged at a negative 8 percent. Fifteen
percent still cite weak sales as their top business problem. The
net percent of owners expecting higher real sales volumes rose 1
point to 3 percent of all owners, after falling a seasonally
adjusted 6 points in October — a weak showing. Not much help for
hiring or inventory investment in those numbers.
[to top of second column]
Earnings trends deteriorated a bit in November,
falling to a net negative 24 percent. If these were publicly
traded companies, the stock indexes would not look good. The
economy remains bifurcated, with large firms doing fairly
well and small businesses showing little growth or
improvement. Three percent reported reduced worker
compensation, and 16 percent reported raising compensation,
yielding a seasonally adjusted net 14 percent, down 2
points, reporting higher worker compensation. A net
seasonally adjusted 14 percent, up 4 points, plan to raise
compensation in the coming months. Overall, the compensation
picture remained at the better end of experience in this
recovery, but historically weak for periods of economic
growth and recovery. With a net 14 percent raising
compensation but a net 2 percent raising selling prices,
profits will continue to be under pressure.
Credit continues to be a nonissue for small
employers, with just 4 percent of the owners reporting that
all their credit needs were not met, down 2 points.
Thirty-two percent reported all credit needs met, and 52
percent explicitly said they did not want a loan.
Twenty-nine percent of all owners reported borrowing on a
regular basis, up 1 point but a near-record low. The average
rate paid on short maturity loans was steady at 5.4 percent
The frequency of reported capital outlays over
the past six months fell 2 points to 55 percent, stuck in
the "mid-50s" since recovering in 2012 from the lows of 45
reached in late 2009 and early 2010. The small-business
sector appears to still be in "maintenance mode," with
little expansion planned in the future. The percent of
owners planning capital outlays in the next three to six
months rose 1 point to 24 percent. Capital spending is at
its highest point since early 2008 but has been stuck well
below normal levels for several years, threatening the
improvements in productivity needed to raise real wages.
The report released this week is based on the responses of 762
randomly sampled small businesses in NFIB's membership, surveyed
throughout the month of November. Download the complete study at
All net percentages are seasonally adjusted unless otherwise
noted. The net percentage is the percent with a favorable response
less the percent of owners with an unfavorable response.
[Text from file received from
National Federation of
Independent Business, Illinois]
The National Federation of Independent
Business is the nation's leading small-business association. A
nonprofit, nonpartisan organization founded in 1943, NFIB represents
the consensus views of its members in Washington, D.C., and all 50
state capitals. The NFIB Research Foundation conducts some of the
most comprehensive research of small-business issues in the nation.
NFIB's Small Business Economic Trends is a monthly survey of
small-business owners' plans and opinions. Decision-makers at the
federal, state and local levels actively monitor these reports,
ensuring that the voice of small business is heard.