Release Date: 09/ 01/ 2005
CONTACT: Kim Maisch, (217) 523-5471 or Michael Diegel, (202) 554-9000
Price, Profit Pressures Causing Some Concern for the Fourth Quarter
SPRINGFIELD, Ill. -- More Illinois small-business owners are feeling that the state business climate is supportive in the third quarter than in the second quarter, but are more wary of the outlook for the next three months, according to the Illinois Small-Business ConditionsSM. The report’s data, which was released today by the National Federation of Independent Business/Illinois, provides an overview of small-business conditions within Illinois and compares them with neighboring states.
A net 18 percent (percent positive minus percent negative) of the state’s small employers believe the business environment is supportive, compared to a net 6 percent in June. However, a net 51 percent characterized the outlook for business as “good” over the next three months, down from a net 61 percent three months ago.
“Some of the optimism may be a result of a long-awaited workers’ compensation reform package that passed this session and was recently signed into law,” said Kim Clarke Maisch, state director for NFIB/Illinois. “Another factor may be that anxiety lessens while the legislature is adjourned. However, as budget deficits loom and government corruption charges continuing to dominate the news, employers in Illinois may not feel so good about the state of business for next quarter.”
A net 22 percent of small-business owners reported that profits were good, compared to a net 15 percent in June, while the net percent of those reporting that sales are good remained relatively stable. At the same time, though, a net 51 percent reported that their costs increased in the last three months. But only a net 14 percent said they had increased selling prices to compensate. Rising costs are primarily due to increased energy prices and compensation increases among other factors, indicating that pressure on profits may develop in the coming months.
The job outlook for employees remains stable with a net 18 percent of respondents reporting that they had one or more job openings. When asked how they would increase employee compensation by the equivalent of $1 per hour (if they were to do so), 62 percent of small-business owners said they would provide it in the form of wages, with 5 percent saying they would increase health benefits and 4 percent saying they would increase retirement benefits. Seventy-one percent say they believe that given a choice, employees would choose increased wages over other forms of compensation, and indication that employers are trying to deliver what job seekers desire.
Small-business owners’ opinions of the business climate and business conditions in Indiana, Iowa and Missouri generally held steady from the second quarter to the third, while Wisconsin respondents shared Illinois’ growing pessimism for the fourth quarter. Those surveyed in Wisconsin who described the outlook as “good” for the next three months dropped from a net 68 percent to a net 60 percent. The job outlook in those four states also remained stable compared to June.
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.
| Illinois Small-Business ConditionsSM | ||||||
| This chart shows the results from Illinois and its comparative standing among selected nearby states. | ||||||
| Ill. | Ind. | Iowa | Mo. | Wis. | ||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 5/2005 | 18 | 28 | 32 | 28 | 17 |
| Prior qtr. | 6 | 32 | 34 | 39 | 31 | |
| Business conditions in market area | ||||||
| Net % "good" | 5/2005 | 31 | 29 | 41 | 44 | 36 |
| Prior qtr. | 30 | 31 | 45 | 43 | 40 | |
| Net % "improving" | 5/2005 | 8 | 9 | 5 | 11 | 6 |
| Prior qtr. | 10 | 12 | 9 | 15 | 19 | |
| Outlook for business | ||||||
| Net % "good" in next three months | 5/2005 | 51 | 56 | 55 | 66 | 60 |
| Prior qtr. | 61 | 52 | 64 | 62 | 68 | |
| Reason for optimism | ||||||
| % Sales prospects | 5/2005 | 49 | 45 | 41 | 43 | 49 |
| Prior qtr. | 46 | 47 | 41 | 42 | 44 | |
| % Lower costs | 5/2005 | 3 | 4 | 1 | 4 | 2 |
| Prior qtr. | 5 | 2 | 3 | 2 | 2 | |
| % Price increases | 5/2005 | 1 | 5 | 2 | 3 | 3 |
| Prior qtr. | 4 | 3 | 5 | 5 | 5 | |
| % Greater productivity | 5/2005 | 16 | 12 | 17 | 11 | 11 |
| Prior qtr. | 12 | 12 | 14 | 16 | 14 | |
| % Government policy | 5/2005 | 2 | 5 | 2 | 6 | 2 |
| Prior qtr. | 5 | 4 | 4 | 4 | 4 | |
| % Seasonal/Weather | 5/2005 | 11 | 8 | 9 | 11 | 10 |
| Prior qtr. | - | - | - | - | - | |
| Reason for pessimism | ||||||
| % Sales prospects | 5/2005 | IC* | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Cost increases | 5/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Pressure on selling prices | 5/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Lower productivity | 5/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Government policies | 5/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| Ill. | Ind. | Iowa | Mo. | Wis. | ||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 5/2005 | 39 | 37 | 43 | 46 | 42 |
| Prior qtr. | 34 | 35 | 55 | 45 | 43 | |
| Profits | ||||||
| Net % profits "good" | 5/2005 | 22 | 14 | 25 | 26 | 22 |
| Prior qtr. | 15 | 19 | 33 | 24 | 23 | |
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 5/2005 | 18 | 19 | 18 | 20 | 24 |
| Prior qtr. | 19 | 16 | 16 | 19 | 20 | |
| Per employee payroll cost | ||||||
| Net % "risen" | 5/2005 | 17 | 12 | 18 | 13 | 20 |
| Prior qtr. | 11 | 14 | 16 | 16 | 12 | |
| Employee cost pressures (greater) | ||||||
| % Wages | 5/2005 | 51 | 57 | 56 | 58 | 49 |
| Prior qtr. | 51 | 55 | 58 | 54 | 53 | |
| % Benefits | 5/2005 | 34 | 26 | 28 | 24 | 35 |
| Prior qtr. | 29 | 30 | 24 | 26 | 33 | |
| Ill. | Ind. | Iowa | Mo. | Wis. | ||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 5/2005 | 45 | 41 | 38 | 42 | 41 |
| Prior qtr. | 44 | 38 | 33 | 46 | 41 | |
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 5/2005 | 43 | 42 | 43 | 40 | 45 |
| Prior qtr. | 43 | 38 | 36 | 43 | 41 | |
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 5/2005 | 39 | 39 | 40 | 38 | 44 |
| Prior qtr. | 40 | 35 | 33 | 35 | 36 | |
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 5/2005 | 54 | 49 | 52 | 54 | 54 |
| Prior qtr. | 56 | 57 | 53 | 49 | 56 | |
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 5/2005 | 40 | 35 | 41 | 39 | 43 |
| Prior qtr. | 41 | 38 | 41 | 41 | 41 | |
| % All credit needs not satisfied | 5/2005 | 5 | 5 | 6 | 6 | 6 |
| Prior qtr. | 6 | 6 | 4 | 5 | 6 | |
| % No credit needs | 5/2005 | 49 | 53 | 47 | 47 | 48 |
| Prior qtr. | 46 | 50 | 49 | 45 | 46 | |
| Ill. | Ind. | Iowa | Mo. | Wis. | ||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 5/2005 | 51 | 55 | 59 | 58 | 63 |
| Prior qtr. | 47 | 57 | 58 | 53 | 54 | |
| Selling prices (last three months) | ||||||
| Net % increased | 5/2005 | 14 | 16 | 15 | 18 | 22 |
| Prior qtr. | 17 | 17 | 22 | 20 | 20 | |
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 5/2005 | 9 | 8 | 9 | 13 | 9 |
| Prior qtr. | 9 | 12 | 9 | 11 | 8 | |
| Single most important business problem | ||||||
| % Weak sales | 5/2005 | 9 | 11 | 9 | 9 | 11 |
| Prior qtr. | 13 | 9 | 9 | 12 | 10 | |
| % Taxes | 5/2005 | 13 | 15 | 10 | 9 | 12 |
| Prior qtr. | 15 | 15 | 11 | 12 | 15 | |
| % Employee quality/costs | 5/2005 | 8 | 9 | 8 | 12 | 9 |
| Prior qtr. | 6 | 4 | 7 | 7 | 6 | |
| % Insurance | 5/2005 | 14 | 16 | 20 | 20 | 20 |
| Prior qtr. | 17 | 18 | 19 | 19 | 23 | |
| % Big-business competition | 5/2005 | 15 | 13 | 18 | 13 | 13 |
| Prior qtr. | 14 | 15 | 12 | 12 | 15 | |
| % Inflation/Rising prices | 5/2005 | 11 | 13 | 11 | 13 | 12 |
| Prior qtr. | 13 | 13 | 19 | 13 | 13 | |
| % Credit availability/Interest rates | 5/2005 | 3 | 2 | 2 | 4 | 1 |
| Prior qtr. | 3 | 4 | 4 | 3 | 3 | |
| % Regulations/Red tape | 5/2005 | 9 | 6 | 9 | 6 | 8 |
| Prior qtr. | 8 | 8 | 7 | 8 | 4 | |
| Illinois Quarterly Spotlight | |
| If you were to give your employees a compensation increase equivalent to $1.00 per hour, how would you do it? Would you give it to them in... | |
| Wages or salary | 62% |
| Health benefits | 5% |
| Retirement benefits | 4% |
| Paid leave | 3% |
| Or, some other way? | 8% |
| Wouldn't give increase | 5% |
| Don't know/Refused | 13% |
| Total | 100% |
| If your employees could choose, how would they like to receive a compensation increase of $1.00 per hour? Do you think they would like the increase in... | |
| Wages or salary | 71% |
| Health benefits | 7% |
| Retirement benefits | 3% |
| Paid leave | 1% |
| Or, some other way? | 3% |
| Wouldn't give increase | 3% |
| Don't know/Refused | 12% |
| Total | 100% |
The Poll
NFIB’s Illinois Small-Business ConditionsSM is a telephone survey of a random sample of Illinois 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.
