Release Date: 12/ 01/ 2005
CONTACT: Mike Diegel or Melissa Sharp, (202) 554-9000
Purchasing, Selling Costs Reported Rising; Overall Climate Shows Slight Improvement
DES MOINES, Iowa -- Significantly more small-business owners this month are reporting increases in the prices they pay for goods and materials than in September, and are in turn raising selling prices, according to the Iowa Small-Business ConditionsSM. The report's data, released today by the National Federation of Independent Business/Iowa, provides an overview of small-business conditions within Iowa and compares them with neighboring states.
A net 69 percent of the state's small employers said they are paying higher prices on their purchases, up from a net 59 percent in the prior quarter. A net 23 percent reported raising selling prices, up from a net 15 percent last quarter.
"It's clear from this survey that the increase we've seen in energy prices this year are beginning to be felt throughout the supply chain," said Dave Brasher, NFIB/Iowa's state director. "Small-business owners are under tremendous pressure to find ways to cope with the increased costs, and price increases are one unfortunate consequence."
When asked what the impact of the recent run-up in energy prices has had on their business, a total of 63 percent of respondents reported some negative impact, while 19 percent responded "no impact." To offset rising energy costs, 25 percent said they reduced energy use, 20 percent reported that they are absorbing those costs with lower earnings, and 19 percent said they raised selling prices.
"Iowa's small-business owners seem to be paying for those price increases with increased borrowing," Brasher said, noting that the number reporting "no credit needs" dropped from a net 47 percent last quarter to a net 39 percent this quarter. Fortunately, he added, getting credit does not appear to be a problem; of those who had credit, 88 percent were able to get it.
There also were similar purchasing price increases reported by small-business owners in Illinois, Minnesota and Missouri. A net 62 percent of those surveyed in Illinois reported increased purchasing prices, up from a net 51 percent last quarter. In Minnesota, the number rose from a net 59 percent to a net 68 percent, while in Missouri, the number increased to a net 63 percent from a net 58 percent.
At the same time, a net 37 percent (positive percent minus negative percent) of small-business owners described the state's overall business climate as "supportive," a slight improvement from last quarter's net 32 percent.
| Iowa Small-Business ConditionsSM | ||||||
| This chart shows the results from Iowa and its comparative standing among selected nearby states. | ||||||
| Iowa | Ill. | Minn. | Mo. | Wis. | ||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 11/2005 | 37 | 12 | 27 | 31 | 23 |
| Prior qtr. | 32 | 18 | 17 | 28 | 17 | |
| Business conditions in market area | ||||||
| Net % "good" | 11/2005 | 40 | 24 | 35 | 45 | 35 |
| Prior qtr. | 41 | 31 | 33 | 44 | 36 | |
| Net % "improving" | 11/2005 | 4 | 0 | -3 | 5 | 4 |
| Prior qtr. | 5 | 8 | 3 | 11 | 6 | |
| Outlook for business | ||||||
| Net % "good" in next three months | 11/2005 | 57 | 51 | 55 | 59 | 51 |
| Prior qtr. | 55 | 51 | 53 | 66 | 60 | |
| Reason for optimism | ||||||
| % Sales prospects | 11/2005 | 42 | 47 | 51 | 49 | 45 |
| Prior qtr. | 41 | 49 | 43 | 43 | 49 | |
| % Lower costs | 11/2005 | 6 | 4 | 3 | 4 | 7 |
| Prior qtr. | 1 | 3 | 2 | 4 | 2 | |
| % Price increases | 11/2005 | 4 | 2 | 3 | 4 | 5 |
| Prior qtr. | 2 | 1 | 3 | 3 | 3 | |
| Greater productivity | 11/2005 | 16 | 16 | 19 | 14 | 14 |
| Prior qtr. | 17 | 16 | 14 | 12 | 11 | |
| % Government policy | 11/2005 | 5 | 3 | 2 | 4 | 6 |
| Prior qtr. | 2 | 2 | 2 | 6 | 2 | |
| % Seasonal Weather | 11/2005 | 13 | 12 | 9 | 8 | 10 |
| Prior qtr. | 9 | 11 | 14 | 11 | 10 | |
| Reason for pessimism | ||||||
| % Sales prospects | 11/2005 | IC* | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Cost increases | 11/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Pressure on selling prices | 11/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Lower productivity | 11/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Government policies | 11/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| Iowa | Ill. | Minn. | Mo. | Wis. | ||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 11/2005 | 43 | 36 | 41 | 43 | 41 |
| Prior qtr. | 43 | 39 | 44 | 46 | 42 | |
| Profits | ||||||
| Net % profits "good" | 11/2005 | 26 | 16 | 16 | 24 | 22 |
| Prior qtr. | 25 | 22 | 18 | 27 | 22 | |
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 11/2005 | 21 | 17 | 19 | 21 | 21 |
| Prior qtr. | 18 | 18 | 23 | 20 | 24 | |
| Per employee payroll cost | ||||||
| Net % "risen" | 11/2005 | 16 | 14 | 24 | 19 | 19 |
| Prior qtr. | 18 | 17 | 21 | 13 | 20 | |
| Employee cost pressures (greater) | ||||||
| % Wages | 11/2005 | 57 | 51 | 53 | 52 | 55 |
| Prior qtr. | 56 | 51 | 55 | 58 | 49 | |
| % Benefits | 11/2005 | 26 | 31 | 35 | 33 | 33 |
| Prior qtr. | 28 | 34 | 30 | 24 | 35 | |
| Iowa | Ill. | Minn. | Mo. | Wis. | ||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 11/2005 | 40 | 44 | 44 | 46 | 45 |
| Prior qtr. | 38 | 45 | 45 | 42 | 41 | |
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 44 | 44 | 48 | 45 | 44 |
| Prior qtr. | 43 | 43 | 46 | 40 | 45 | |
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 37 | 42 | 48 | 46 | 44 |
| Prior qtr. | 40 | 39 | 42 | 38 | 44 | |
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 11/2005 | 54 | 53 | 55 | 53 | 51 |
| Prior qtr. | 52 | 54 | 55 | 54 | 54 | |
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 11/2005 | 50 | 42 | 43 | 39 | 45 |
| Prior qtr. | 41 | 40 | 41 | 39 | 43 | |
| % All credit needs not satisfied | 11/2005 | 7 | 5 | 6 | 5 | 9 |
| Prior qtr. | 6 | 5 | 6 | 6 | 6 | |
| % No credit needs | 11/2005 | 39 | 49 | 47 | 53 | 42 |
| Prior qtr. | 47 | 49 | 47 | 47 | 48 | |
| Iowa | Ill. | Minn. | Mo. | Wis. | ||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 11/2005 | 69 | 62 | 68 | 63 | 63 |
| Prior qtr. | 59 | 51 | 59 | 58 | 63 | |
| Selling prices (last three months) | ||||||
| Net % increased | 11/2005 | 23 | 20 | 22 | 21 | 21 |
| Prior qtr. | 15 | 14 | 16 | 18 | 22 | |
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 11/2005 | 11 | 13 | 11 | 11 | 11 |
| Prior qtr. | 9 | 9 | 10 | 13 | 9 | |
| Single most important business problem | ||||||
| % Weak sales | 11/2005 | 8 | 12 | 11 | 9 | 10 |
| Prior qtr. | 9 | 9 | 14 | 9 | 11 | |
| % Taxes | 11/2005 | 11 | 10 | 7 | 9 | 9 |
| Prior qtr. | 10 | 13 | 9 | 9 | 12 | |
| % Employee quality/costs | 11/2005 | 9 | 9 | 10 | 13 | 8 |
| Prior qtr. | 8 | 8 | 9 | 12 | 9 | |
| % Insurance | 11/2005 | 19 | 16 | 15 | 16 | 23 |
| Prior qtr. | 20 | 14 | 17 | 20 | 20 | |
| % Big-business competition | 11/2005 | 14 | 12 | 18 | 16 | 17 |
| Prior qtr. | 18 | 15 | 13 | 13 | 13 | |
| % Inflation/Rising prices | 11/2005 | 15 | 16 | 17 | 14 | 14 |
| Prior qtr. | 11 | 11 | 14 | 13 | 12 | |
| % Credit availability/Interest rates | 11/2005 | 3 | 3 | 3 | 3 | 1 |
| Prior qtr. | 2 | 3 | 3 | 4 | 1 | |
| % Regulations/Red tape | 11/2005 | 8 | 7 | 7 | 9 | 7 |
| Prior qtr. | 9 | 9 | 6 | 6 | 8 | |
*Insufficient cases
| Iowa Quarterly Spotlight | |
|
What has been the impact on your business of the recent run-up in energy prices? | |
| Seriously negative | 20% |
| Somewhat negative | 24% |
| Slightly negative | 29% |
| No impact | 18% |
| Positive | 4% |
| Don't know/Refused | 5% |
| Total | 100% |
| What is the single most important action you have recently taken to offset rising energy costs? | |
| Raised selling prices | 19% |
| Invested in energy-conserving equipment or vehicles | 10% |
| Reduced energy use | 25% |
| Absorbed costs with lower earnings | 20% |
| Reduced non-energy costs such as payroll | 5% |
| Other | 9% |
| Don't know/Refused | 11% |
| Total | 100% |
The Poll
NFIB’s Iowa Small-Business ConditionsSM is a telephone survey of a random sample of Iowa 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.
