Release Date: 12/ 01/ 2005
CONTACT: Jason Shelley, (317) 638-4447 or Michael Diegel, (202) 554-9000
Business Conditions Decline, But Owners Show Some Optimism
INDIANAPOLIS, Ind. -- Indiana's small-business owners are being severely impacted by rising energy prices, part of a decline in business conditions that leaves small-business owners less optimistic about the future, according to the Indiana Small-Business ConditionsSM report. The report's data, which was released today by the National Federation of Independent Business/Indiana, provides an overview of small-business conditions within Indiana.
An overwhelming 73 percent reported that the recent run-up in energy prices has had a negative effect on their business. Twenty-six percent of small-business owners are coping with the increase by reducing energy use, while 20 percent are absorbing those costs in the form of lower earnings.
As a result, general business conditions as perceived by small-business owners have deteriorated in the past three months. A net 23 percent (percent positive minus percent negative) say conditions are "good," a decline from 29 percent in the prior quarter. Illinois and Ohio reported similar results, with Illinois showing a drop from a net 31 percent to a net 24 percent, while Ohio had a drop from a net 20 percent to a net 15 percent.
More alarming is the number of Indiana small-business owners who say that conditions are "improving," which has dropped from a net positive 9 percent to a net negative 4 percent. Of the neighboring states, Illinois showed a drop from a net 8 percent to a net zero percent, while Ohio showed a drop from a net positive 2 percent to a net negative 5 percent.
"Clearly, Indiana's business climate and outlook were negatively impacted in a major way by the Delphi announcement and increased energy costs," said Jason Shelley, NFIB/Indiana state director. "That's also reflected in small-business owners' optimism for the future."
A net 50 percent of Hoosier small-business owners report the outlook for their business is "good" for the next three months, down from a net 56 percent last quarter. Shelley noted that some of the decline in optimism is seasonal. "Businesses like construction typically do not do as well in the winter months as the remainder of year."
| Indiana Small-Business ConditionsSM | ||||||
| This chart shows the results from Indiana and its comparative standing among selected states in the region. | ||||||
| Ind. | Ill. | Mich. | Ohio | |||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 11/2005 | 20 | 12 | 4 | 11 | |
| Prior qtr. | 28 | 18 | 8 | 11 | ||
| Business conditions in market area | ||||||
| Net % "good" | 11/2005 | 23 | 24 | -2 | 15 | |
| Prior qtr. | 29 | 31 | 2 | 20 | ||
| Net % "improving" | 11/2005 | -4 | 0 | -9 | -5 | |
| Prior qtr. | 9 | 8 | -5 | 2 | ||
| Outlook for business | ||||||
| Net % "good" in next three months | 11/2005 | 50 | 51 | 35 | 51 | |
| Prior qtr. | 56 | 51 | 40 | 49 | ||
| Reason for optimism | ||||||
| % Sales prospects | 11/2005 | 45 | 47 | 49 | 46 | |
| Prior qtr. | 45 | 49 | 42 | 50 | ||
| % Lower costs | 11/2005 | 4 | 4 | 4 | 4 | |
| Prior qtr. | 4 | 3 | 3 | 4 | ||
| % Price increases | 11/2005 | 3 | 2 | 2 | 1 | |
| Prior qtr. | 5 | 1 | 2 | 2 | ||
| % Greater productivity | 11/2005 | 17 | 16 | 13 | 13 | |
| Prior qtr. | 12 | 16 | 11 | 12 | ||
| % Government policy | 11/2005 | 4 | 3 | 2 | 4 | |
| Prior qtr. | 5 | 2 | 4 | 3 | ||
| % Seasonal/Weather | 11/2005 | 8 | 12 | 16 | 15 | |
| Prior qtr. | 8 | 11 | 10 | 8 | ||
| Reason for pessimism | ||||||
| % Sales prospects | 11/2005 | IC* | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Cost increases | 11/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Pressure on selling prices | 11/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Lower productivity | 11/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Government policies | 11/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| Ind. | Ill. | Mich. | Ohio | |||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 11/2005 | 33 | 36 | 20 | 37 | |
| Prior qtr. | 37 | 39 | 22 | 34 | ||
| Profits | ||||||
| Net % profits "good" | 11/2005 | 16 | 16 | 4 | 13 | |
| Prior qtr. | 14 | 22 | 0 | 13 | ||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 11/2005 | 16 | 17 | 15 | 17 | |
| Prior qtr. | 19 | 18 | 17 | 17 | ||
| Per employee payroll cost | ||||||
| Net % "risen" | 11/2005 | 16 | 14 | 10 | 15 | |
| Prior qtr. | 12 | 17 | 8 | 12 | ||
| Employee cost pressures (greater) | ||||||
| % Wages | 11/2005 | 54 | 51 | 49 | 54 | |
| Prior qtr. | 57 | 51 | 50 | 50 | ||
| % Benefits | 11/2005 | 26 | 31 | 32 | 32 | |
| Prior qtr. | 26 | 34 | 31 | 33 | ||
| Ind. | Ill. | Mich. | Ohio | |||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 11/2005 | 43 | 44 | 43 | 42 | |
| Prior qtr. | 41 | 45 | 38 | 40 | ||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 41 | 44 | 36 | 46 | |
| Prior qtr. | 42 | 43 | 35 | 40 | ||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 39 | 42 | 39 | 41 | |
| Prior qtr. | 39 | 39 | 36 | 39 | ||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 11/2005 | 57 | 53 | 52 | 55 | |
| Prior qtr. | 49 | 54 | 53 | 50 | ||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 11/2005 | 34 | 42 | 39 | 39 | |
| Prior qtr. | 35 | 40 | 31 | 37 | ||
| % All credit needs not satisfied | 11/2005 | 7 | 5 | 10 | 6 | |
| Prior qtr. | 5 | 5 | 7 | 6 | ||
| % No credit needs | 11/2005 | 53 | 49 | 47 | 52 | |
| Prior qtr. | 53 | 49 | 55 | 51 | ||
| Ind. | Ill. | Mich. | Ohio | |||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 11/2005 | 63 | 62 | 67 | 62 | |
| Prior qtr. | 55 | 51 | 55 | 55 | ||
| Selling prices (last three months) | ||||||
| Net % increased | 11/2005 | 15 | 20 | 19 | 18 | |
| Prior qtr. | 16 | 14 | 10 | 16 | ||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 11/2005 | 9 | 13 | 12 | 13 | |
| Prior qtr. | 8 | 9 | 9 | 8 | ||
| Single most important business problem | ||||||
| % Weak sales | 11/2005 | 10 | 12 | 20 | 11 | |
| Prior qtr. | 11 | 9 | 17 | 13 | ||
| % Taxes | 11/2005 | 15 | 10 | 8 | 13 | |
| Prior qtr. | 15 | 13 | 11 | 18 | ||
| % Employee quality/costs | 11/2005 | 7 | 9 | 8 | 7 | |
| Prior qtr. | 9 | 8 | 7 | 8 | ||
| % Insurance | 11/2005 | 16 | 16 | 13 | 16 | |
| Prior qtr. | 16 | 14 | 17 | 13 | ||
| % Big-business competition | 11/2005 | 11 | 12 | 14 | 11 | |
| Prior qtr. | 13 | 15 | 11 | 14 | ||
| % Inflation/Rising prices | 11/2005 | 16 | 16 | 18 | 19 | |
| Prior qtr. | 13 | 11 | 14 | 12 | ||
| % Credit availability/Interest rates | 11/2005 | 3 | 3 | 3 | 3 | |
| Prior qtr. | 2 | 3 | 3 | 3 | ||
| % Regulations/Red tape | 11/2005 | 6 | 7 | 5 | 8 | |
| Prior qtr. | 6 | 9 | 5 | 8 | ||
| Indiana 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 | 6% |
| Total | 100% |
| What is the single most important action you have recently taken to offset rising energy costs? | |
| Raising selling prices | 16% |
| Invested in energy-conserving equipment or vehicles | 8% |
| Reduced energy use | 26% |
| Absorbed costs with lower earnings | 20% |
| Reduced non-energy costs such as payroll | 7% |
| Other | 10% |
| Don't know/Refused | 13% |
| Total | 100% |
The Poll
NFIB’s Indiana Small-Business ConditionsSM is a telephone survey of a random sample of Indiana 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.
