Release Date: 09/ 01/ 2005
CONTACT: Armando Paolino, (203) 758-8981 or Jim Jennings, (240) 645-4099
Increases in Energy Costs, Taxes Fuel Pessimism, Third Quarter NFIB Survey Finds
HARTFORD, Conn. -- Connecticut’s small-business owners believe the state’s economy is getting worse, according to the Connecticut Small-Business ConditionsSM. The report’s data, which was released today by the National Federation of Independent Business/Connecticut, provides an overview of small-business conditions within Connecticut and compares them with neighboring states.
“There is a marked drop off in business owners who see business conditions improving in their market area,” said Armando Paolino, state director of NFIB/Connecticut. He noted that between the second quarter (June 1) and this quarter, there was a net 10 percentage point decline in business owners who said business conditions were “good.” Of the small-business owners surveyed in the Northeast, Connecticut’s had the most pessimistic outlook — 41 percent of business owners in Massachusetts and 29 percent in New York said business conditions were “good.”
“The cost of energy, taxes and the overall business environment in Connecticut has not improved, and that is reflected in this survey,” said Paolino. “Lawmakers need to take this into consideration when thinking about next year’s Legislative session.” The survey contacted 350 small businesses in the state.
Only a net 13 percent said their profits during the third quarter could be considered “good,” compared to a net 29 percent three months earlier. “Clearly, business has been off during the past three months, and the small-business owners as a whole don’t look for things to improve much over the next three months,” said Paolino. Only a net 57 percent of the state’s small employers, a relatively low number among the notoriously optimistic small business population, believed business conditions will improve over the next three months.
Small-business hiring has been on the uptake, however, with a net 22 percent saying they currently have job openings, compared to only 16 percent in the second quarter. Over the same three-month period, 43 percent said they made expenditures for employee training (compared to 34 percent in the second quarter).
When asked to rank their most important business problem, Connecticut small-business owners ranked the cost of insurance followed by taxes and competition from big-business.
Paolino noted that only 31 percent of the small-business owners reported that all of their credit needs were satisfied (compared to 46 percent in the second quarter), and when they look to improve their cash flow, 21 percent said they draw on personal resources while 25 percent said they try harder to collect the money owned to them.
“For small firms, cash flow is a major headache, and that, coupled with their credit satisfaction level, has the small-business owners feeling kinda blue,” said Paolino.
The survey was completed prior to the announcement that the Navy’s submarine base in Groton would not be closed as part of the Base Closure and Realignment Commission. The state’s pessimistic outlook may be attributed to the debate this summer on the possibility of closing the base. Check out December’s Connecticut Small Business ConditionsSM report to see if small-business owners are more positive now that the decision has been made to keep the base open.
The Small Business ConditionsSM reports are developed from surveys of small-business owners in selected states. The surveys are designed to determine the condition of the small-business economy in each particular state. The surveys are conducted every three months and results are released on the first day of the month following completion. The text of the questions and the complete response set to the survey can be found at www.NFIB.com/research.
| New Jersey Small-Business ConditionsSM | ||||||
| This chart shows the results from New Jersey and its comparative standing among selected nearby states. | ||||||
| Conn. | Mass. | N.Y. | ||||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 8/2005 | 6 | 11 | 12 | ||
| Prior qtr. | 7 | 15 | 0 | |||
| Business conditions in market area | ||||||
| Net % "good" | 8/2005 | 29 | 41 | 29 | ||
| Prior qtr. | 39 | 33 | 22 | |||
| Net % "improving" | 8/2005 | 7 | 6 | 9 | ||
| Prior qtr. | 8 | 12 | 0 | |||
| Outlook for business | ||||||
| Net % "good" in next three months | 8/2005 | 57 | 62 | 53 | ||
| Prior qtr. | 60 | 60 | 47 | |||
| Reason for optimism | ||||||
| % Sales prospects | 8/2005 | 47 | 45 | 47 | ||
| Prior qtr. | 47 | 41 | 48 | |||
| % Lower costs | 8/2005 | 4 | 3 | 3 | ||
| Prior qtr. | 2 | 6 | 4 | |||
| % Price increases | 8/2005 | 6 | 3 | 7 | ||
| Prior qtr. | 7 | 4 | 3 | |||
| % Greater productivity | 8/2005 | 10 | 14 | 13 | ||
| Prior qtr. | 19 | 10 | 13 | |||
| % Government policy | 8/2005 | 4 | 2 | 5 | ||
| Prior qtr. | 4 | 2 | 4 | |||
| % Seasonal/Weather | 8/2005 | 5 | 12 | 7 | ||
| Prior qtr. | - | - | - | |||
| Reason for pessimism | ||||||
| % Sales prospects | 8/2005 | IC* | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Cost increases | 8/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Pressure on selling prices | 8/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Lower productivity | 8/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Government policy | 8/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| Conn. | Mass. | N.Y. | ||||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 8/2005 | 38 | 48 | 42 | ||
| Prior qtr. | 47 | 39 | 31 | |||
| Profits | ||||||
| Net % profits "good" | 8/2005 | 13 | 32 | 26 | ||
| Prior qtr. | 29 | 26 | 10 | |||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 8/2005 | 22 | 23 | 23 | ||
| Prior qtr. | 16 | 17 | 21 | |||
| Per employee payroll cost | ||||||
| Net % "risen" | 8/2005 | 15 | 16 | 19 | ||
| Prior qtr. | 15 | 15 | 16 | |||
| Employee cost pressures (greater) | ||||||
| % Wages | 8/2005 | 47 | 47 | 48 | ||
| Prior qtr. | 46 | 51 | 45 | |||
| % Benefits | 8/2005 | 35 | 35 | 29 | ||
| Prior qtr. | 28 | 23 | 31 | |||
| Conn. | Mass. | N.Y. | ||||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 8/2005 | 41 | 41 | 46 | ||
| Prior qtr. | 41 | 42 | 41 | |||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 8/2005 | 41 | 41 | 46 | ||
| Prior qtr. | 39 | 41 | 40 | |||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 8/2005 | 43 | 38 | 43 | ||
| Prior qtr. | 34 | 35 | 35 | |||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 8/2005 | 58 | 52 | 55 | ||
| Prior qtr. | 47 | 51 | 45 | |||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 8/2005 | 31 | 40 | 32 | ||
| Prior qtr. | 46 | 36 | 35 | |||
| % All credit needs not satisfied | 8/2005 | 10 | 5 | 10 | ||
| Prior qtr. | 3 | 7 | 6 | |||
| % No credit needs | 8/2005 | 53 | 49 | 54 | ||
| Prior qtr. | 45 | 51 | 50 | |||
| Conn. | Mass. | N.Y. | ||||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 8/2005 | 58 | 55 | 55 | ||
| Prior qtr. | 52 | 50 | 54 | |||
| Selling prices (last three months) | ||||||
| Net % increased | 8/2005 | 14 | 14 | 18 | ||
| Prior qtr. | 15 | 18 | 14 | |||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 8/2005 | 10 | 10 | 11 | ||
| Prior qtr. | 10 | 9 | 11 | |||
| Single most important business problem | ||||||
| % Weak sales | 8/2005 | 9 | 9 | 11 | ||
| Prior qtr. | 14 | 13 | 11 | |||
| % Taxes | 8/2005 | 16 | 8 | 15 | ||
| Prior qtr. | 12 | 10 | 11 | |||
| % Employee quality/costs | 8/2005 | 7 | 11 | 7 | ||
| Prior qtr. | 9 | 9 | 8 | |||
| % Insurance | 8/2005 | 17 | 19 | 15 | ||
| Prior qtr. | 19 | 17 | 16 | |||
| % Big-business competition | 8/2005 | 14 | 13 | 13 | ||
| Prior qtr. | 11 | 14 | 14 | |||
| % Inflation/Rising prices | 8/2005 | 12 | 15 | 10 | ||
| Prior qtr. | 12 | 11 | 10 | |||
| % Credit availability/Interest rates | 8/2005 | 3 | 4 | 3 | ||
| Prior qtr. | 3 | 3 | 1 | |||
| % Regulations/Red tape | 8/2005 | 8 | 6 | 8 | ||
| Prior qtr. | 7 | 7 | 7 | |||
* Insufficient cases
| Connecticut Quarterly Spotlight | |
| Is the PRIMARY reason for any cash flow problems in your business generally associated with:? | |
| The need to make large investments and wait for sales | 5% |
| Unexpected variations in sales and costs | 11% |
| Seasonality | 14% |
| Weak sales | 12% |
| Difficulty collecting money owed you | 17% |
| Don't expect cash flow problems | 27% |
| Other2 | 2% |
| Don't know/Refused | 12% |
| Total | 100% |
| Which is the ONE most important action you usually take to resolve a cash flow problem? Do you:? | |
| Draw on personal resources | 21% |
| Borrow | 11% |
| Adjust scheduled payments | 13% |
| Adjst schedules purchases | 10% |
| Try harder to collect money owed you | 25% |
| Other | 3% |
| Don't know/Refused | 18% |
| Total | 100% |
The Poll
NFIB’s Connecticut Small-Business ConditionsSM is a telephone survey of a random sample of Connecticut small employers regarding business conditions within the state. “Small employer” is defined here as employing between one and 250 people (not including the owner(s)) in a for-profit business. Each edition of the survey has a minimum of 350 respondents. The sampling error is ± 5 percentage points. 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.
