Small Business and the U.S. Economy: November 2012
Small businesses are experiencing slower sales growth, and most business owners have a pessimistic outlook of the economy. This is according to a recent survey carried out by PNC Financial Services Group Inc. The survey, which sampled about 1700 small business owners, shows that only 23% of them plan to hire new employees in the coming 6 months.
The percentage represents an increase of 3% compared to 2011, but a decline by 5% from the numbers in spring. The number of respondents who think the national economy will become worse increased by 14%.
The majority of respondents were concerned about the impact of the elections on their business. President Obama and his Republican challenger Mitt Romney addressed the concerns of small business owners during their campaigns. The two leaders debated on small business issues and both of them supported cutting taxes. What was clear is that both Obama and Romney recognized the importance of small businesses in the economy and vowed to pursue initiatives that would spur their growth.
Back to employment matters, the job market has been showing modest gains. According to the Bureau of Labor Statistics, the economy has created an average of 173,000 jobs a month. In October, more than 170,000 new jobs were added. However, the rate of unemployment rose from 7.8% in September to reach 7.9% in October.
With the Obama administration back in office, it remains to be seen how the business environment for will be like. The major concern of most of the respondents surveyed is sales. According to Sageworks, the sales volume from SMBs is growing but at a decreasing pace. Another concern of most SMBs is access to capital. While not many small businesses are looking for financing, those that need the funds find it difficult to get them.