Release Date: 09/ 01/ 2005
CONTACT: Martyn Hopper or Michael Shaw, (916) 448-9904or Tony Malandra, (415) 664-9685
State makes impressive gains in six key indicators of growth
SACRAMENTO, Calif. -- The patient is slowly coming out of its long economic coma. Last quarter, when the National Federation of Independent Business released its California Small-Business ConditionsSM report, the Golden State racked up a negative 1 percent rate from Main Street firms on overall business environment, placing it 25th out of the 26 large-economy states measured by the NFIB Research Foundation.
Today's release of the latest quarterly report paints a different picture. Although California crept up only one rank to 24th, there were plenty of angels – not devils – emerging from the details of the 22-question survey. This time, when asked to rank how supportive the state’s business environment – which includes government, banks, media and community groups – is to them, small-business owners gave California a 7 percent improvement. While increasing from a negative 1 percent to a positive 6 percent rating might not seem like much to celebrate (Virginia leads the nation in this barometer with 41 percent), other key indicators show cause to strike up the band.
California came in second in the nation in improved sales (an eight-point jump from last quarter), second in job openings (a six-point increase), fourth in the outlook for the next three months (a seven-point jump), sixth in the number of small-business owners who called market conditions in their area “good” (a nine-point spike), seventh in improved profits, and eighth in the percentage of small-business owners who said market conditions in their area were “improving” (an eight-point increase from last quarter).
"They have been late in arriving, but the savings from last year's arrest and reversal of skyrocketing workers' compensation premiums are finally being felt," said Martyn Hopper, state director for the 35,000-member NFIB/California. "The workers' compensation reforms passed last year at the insistence of Governor Schwarzenegger help explain the improved numbers between the quarterly reports. It brought hope along with financial relief. However, our anemic rating in the overall state business environment will be with us for as long as an extremely pro-tax, pro-litigation, and anti-small-business legislature continues its current ways.”
For information about the Small-Business ConditionsSM project and other small-business research studies conducted by the NFIB Research Foundation, visit www.NFIB.com/research.
| California Small-Business ConditionsSM | ||||||
| This chart shows the results within California and its principal regions. | ||||||
| Calif. | North. | Central | South. | |||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 8/2005 | 6 | 9 | 4 | 5 | |
| Prior qtr. | -1 | 0 | 1 | -2 | ||
| Business conditions in market area | ||||||
| Net % "good" | 8/2005 | 48 | 44 | 50 | 49 | |
| Prior qtr. | 36 | 26 | 40 | 41 | ||
| Net % "improving" | 8/2005 | 17 | 16 | 24 | 17 | |
| Prior qtr. | 14 | 15 | 15 | 14 | ||
| Outlook for business | ||||||
| Net % "good" in next three months | 8/2005 | 67 | 66 | 66 | 68 | |
| Prior qtr. | 60 | 57 | 64 | 60 | ||
| Reason for optimism | ||||||
| % Sales prospects | 8/2005 | 42 | 42 | 39 | 43 | |
| Prior qtr. | 41 | 42 | 43 | 40 | ||
| % Lower costs | 8/2005 | 3 | 4 | 3 | 3 | |
| Prior qtr. | 3 | 2 | 3 | 4 | ||
| % Price increases | 8/2005 | 3 | 3 | 3 | 4 | |
| Prior qtr. | 5 | 6 | 5 | 4 | ||
| % Greater productivity | 8/2005 | 16 | 15 | 17 | 17 | |
| Prior qtr. | 14 | 15 | 11 | 15 | ||
| % Government policy | 8/2005 | 4 | 5 | 5 | 4 | |
| Prior qtr. | 6 | 4 | 5 | 7 | ||
| % Seasonal weather | 8/2005 | 9 | 7 | 11 | 9 | |
| Prior qtr. | 10 | 13 | 12 | 9 | ||
| Reason for pessimism | ||||||
| % Sales prospects | 8/2005 | IC* | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Cost increases | 8/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Pressure on selling prices | 8/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Lower productivity | 8/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Government policies | 8/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| Calif. | North. | Central | South. | |||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 8/2005 | 51 | 47 | 53 | 52 | |
| Prior qtr. | 41 | 31 | 43 | 46 | ||
| Profits | ||||||
| Net % profits "good" | 8/2005 | 33 | 31 | 35 | 33 | |
| Prior qtr. | 27 | 18 | 25 | 32 | ||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 8/2005 | 26 | 23 | 23 | 28 | |
| Prior qtr. | 22 | 19 | 17 | 24 | ||
| Per employee payroll cost | ||||||
| Net % "risen" | 8/2005 | 15 | 13 | 15 | 15 | |
| Prior qtr. | 16 | 13 | 19 | 17 | ||
| Employee cost pressures (greater) | ||||||
| % Wages | 8/2005 | 51 | 52 | 51 | 51 | |
| Prior qtr. | 52 | 49 | 49 | 53 | ||
| % Benefits | 8/2005 | 25 | 25 | 27 | 25 | |
| Prior qtr. | 27 | 26 | 26 | 27 | ||
| Calif. | North. | Central | South. | |||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 8/2005 | 45 | 46 | 43 | 45 | |
| Prior qtr. | 44 | 43 | 44 | 44 | ||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 8/2005 | 45 | 44 | 41 | 47 | |
| Prior qtr. | 38 | 38 | 43 | 37 | ||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 8/2005 | 43 | 38 | 43 | 46 | |
| Prior qtr. | 39 | 39 | 39 | 39 | ||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 8/2005 | 53 | 54 | 52 | 52 | |
| Prior qtr. | 52 | 50 | 49 | 53 | ||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 8/2005 | 37 | 36 | 40 | 38 | |
| Prior qtr. | 39 | 39 | 41 | 39 | ||
| % All credit needs not satisfied | 8/2005 | 5 | 8 | 5 | 4 | |
| Prior qtr. | 7 | 6 | 5 | 8 | ||
| % No credit needs | 8/2005 | 52 | 50 | 49 | 53 | |
| Prior qtr. | 47 | 47 | 46 | 47 | ||
| Calif. | North. | Central | South. | |||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 8/2005 | 50 | 48 | 54 | 50 | |
| Prior qtr. | 48 | 46 | 59 | 46 | ||
| Selling prices (last three months) | ||||||
| Net % increased | 8/2005 | 17 | 20 | 23 | 15 | |
| Prior qtr. | 19 | 19 | 23 | 19 | ||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 8/2005 | 12 | 10 | 11 | 13 | |
| Prior qtr. | 12 | 12 | 16 | 12 | ||
| Single most important business problem | ||||||
| % Weak sales | 8/2005 | 9 | 11 | 7 | 9 | |
| Prior qtr. | 9 | 13 | 9 | 8 | ||
| % Taxes | 8/2005 | 9 | 10 | 10 | 9 | |
| Prior qtr. | 11 | 11 | 13 | 10 | ||
| % Employee quality/costs | 8/2005 | 10 | 12 | 10 | 9 | |
| Prior qtr. | 8 | 7 | 9 | 9 | ||
| % Insurance | 8/2005 | 19 | 19 | 19 | 19 | |
| Prior qtr. | 17 | 15 | 22 | 16 | ||
| % Big-business competition | 8/2005 | 15 | 13 | 12 | 16 | |
| Prior qtr. | 16 | 15 | 13 | 16 | ||
| % Inflation/Rising prices | 8/2005 | 13 | 15 | 11 | 13 | |
| Prior qtr. | 11 | 9 | 11 | 12 | ||
| % Credit availability/Interest rates | 8/2005 | 3 | 3 | 4 | 3 | |
| Prior qtr. | 3 | 2 | 1 | 3 | ||
| % Regulations/Red tape | 8/2005 | 9 | 6 | 10 | 10 | |
| Prior qtr. | 10 | 10 | 9 | 10 | ||
| California Quarterly Spotlight | ||||
| Calif. | North. | Central | South. | |
| In general, how satisfied are you with the direction that California is headed? | ||||
| Very satisfied | 9% | 10% | 8% | 8% |
| Somewhat satisfied | 43% | 44% | 41% | 43% |
| Not too satisfied | 23% | 22% | 24% | 23% |
| Not at all satisfied | 16% | 15% | 19% | 16% |
| Don't know/Refused | 10% | 10% | 8% | 11% |
| Total | 100% | 100% | 100% | 100% |
| Which best describes your long-term intentions for business growth? Would you like to... | ||||
| Grow rapidly | 22% | 21% | 19% | 23% |
| Grow slowly | 46% | 49% | 51% | 44% |
| Stay about the same | 24% | 25% | 22% | 23% |
| Consolidate some | 3% | 1% | 3% | 3% |
| Don't know/Refused | 5% | 4% | 6% | 6% |
| Total | 100% | 100% | 100% | 100% |
The Poll
NFIB’s California Small-Business ConditionsSM is a telephone survey of a random sample of California’s small employers regarding business conditions within the state. “Small employer” is defined here as someone employing between one and 250 people (not including the owner(s)) in a for-profit business. Three separate regional surveys are conducted, each with a minimum of 350 respondents. The Northern California survey samples small employers in ZIP codes 94000-95199 and 95400-96199. San Jose, Sacramento and the Lake Tahoe area are included. The Central California survey samples small employers in ZIP codes 93200-93999 and 95200-95399. Stockton, Modesto, Salinas and Bakersfield are included. The Southern California survey samples small employers in ZIP codes 90000-93199. Santa Barbara, Oxnard and Barstow are included. The sampling error of each survey is ± 5 percentage points. State totals result by population weighting regional totals. Data are collected quarterly in the months of February, May, August and November, beginning in February 2005. The MRCGroup of Las Vegas conducts the survey for the NFIB Research Foundation.
The Sponsor
The NFIB Research Foundation is a 501 (c)(3) organization that provides policy-makers, media, educators, small-business owners and other interested parties empirically based information on small business and small-business owners. The Foundation is affiliated with the National Federation of Independent Business, the nation’s largest small- and independent-business advocacy organization, and is located in Washington, D.C.
