Release Date: 03/ 01/ 2005
CONTACT: Gregg Thompson, (919) 844-6342 or Jim Brown, (615) 874-5288
State's Business Outlook Positive But Business Conditions Lag Behind Neighbors
NORTH CAROLINA -- North Carolina's overall business climate is supportive of small business, but the state's business conditions are lagging against its peers, according to the inaugural North Carolina Small-Business ConditionsSM report.
The report's data, which is the first compilation of its type, was released today by the National Federation of Independent Business/North Carolina. It provides an overview of small-business conditions within North Carolina and compares them with neighboring states.
A net 36 percent (positive percent minus negative percent) of respondents to a recent survey indicated North Carolina is supportive of small business. Comparatively, South Carolina, Tennessee and Virginia registered a net 40 percent, net 31 percent and net 36 percent, respectively. However, only a net 38 percent indicated business conditions in their market area are good, which compared to a net 55 percent in South Carolina, net 47 percent in Tennessee and net 53 percent in Virginia. Nonetheless, a net 27 percent of North Carolina small employers said business conditions are improving, which was slightly higher than South Carolina (net 26 percent), Tennessee (net 21 percent) and Virginia (net 24 percent).
"North Carolina's climate for small business is improving, as the data indicates, but we've got some ground to make up against our rivals," NFIB/North Carolina State Director Gregg Thompson said. "While North Carolina is viewed nationally as a business-friendly state, we shouldn't be trailing our neighbors by as many as 17 percentage points when it comes to business conditions."
Not surprisingly, employee health premiums (37 percent) ranked No. 1 as the most rapidly rising business insurance cost followed by vehicle collision and liability (14 percent), and workers' compensation and property and casualty (both 11 percent).
As a result of last year's hurricanes, 6 percent of responding small businesses suffered significant damage, 13 percent suffered minor damage and 81 percent said they suffered no damage at all.
A net 70 percent characterized the outlook for business over the next three months as good, citing sales prospects (57 percent) and greater productivity (17 percent) as primary reasons for their view. A net 24 percent indicated that profits were "good," and a net 39 percent of those same respondents characterized sales as "good." Overall, a net 54 percent of small employers reported that over the last three months their purchasing prices rose, which was higher than its peer group, while a net 17 percent reported they had increased selling prices.
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.
| North Carolina Small-Business ConditionsSM | ||||||
| This chart shows the results from North Carolina and its comparative standing among selected states in the region. | ||||||
| N.C. | S.C. | Tenn. | Va. | |||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 2/2005 | 36 | 40 | 31 | 35 | |
| Prior qtr. | - | - | - | - | ||
| Business conditions in market area | ||||||
| Net % "good" | 2/2005 | 38 | 55 | 47 | 53 | |
| Prior qtr. | - | - | - | - | ||
| Net % "improving" | 2/2005 | 27 | 26 | 21 | 24 | |
| Prior qtr. | - | - | - | - | ||
| Outlook for business | ||||||
| Net % "good" in next three months | 2/2005 | 70 | 70 | 68 | 71 | |
| Prior qtr. | - | - | - | - | ||
| Reason for optimism | ||||||
| % Sales prospects | 2/2005 | 57 | 47 | 46 | 43 | |
| Prior qtr. | - | - | - | - | ||
| % Lower costs | 2/2005 | 4 | 4 | 4 | 5 | |
| Prior qtr. | - | - | - | - | ||
| % Price increases | 2/2005 | 2 | 4 | 4 | 5 | |
| Prior qtr. | - | - | - | - | ||
| % Greater productivity | 2/2005 | 17 | 18 | 14 | 12 | |
| Prior qtr. | - | - | - | - | ||
| % Government policy | 2/2005 | 2 | 4 | 6 | 7 | |
| Prior qtr. | - | - | - | - | ||
| Reason for pessimism | ||||||
| % Sales prospects | 2/2005 | 14 | 14 | 12 | 6 | |
| Prior qtr. | - | - | - | - | ||
| % Cost increases | 2/2005 | 21 | 14 | 12 | 19 | |
| Prior qtr. | - | - | - | - | ||
| % Pressure on selling prices | 2/2005 | 7 | 0 | 6 | 13 | |
| Prior qtr. | - | - | - | - | ||
| % Lower productivity | 2/2005 | 21 | 14 | 6 | 0 | |
| Prior qtr. | - | - | - | - | ||
| % Government policies | 2/2005 | 7 | 29 | 35 | 25 | |
| Prior qtr. | - | - | - | - | ||
| N.C. | S.C. | Tenn. | Va. | |||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 2/2005 | 39 | 43 | 41 | 46 | |
| Prior qtr. | - | - | - | - | ||
| Profits | ||||||
| Net % profits "good" | 2/2005 | 24 | 24 | 27 | 31 | |
| Prior qtr. | - | - | - | - | ||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 2/2005 | 20 | 20 | 16 | 27 | |
| Prior qtr. | - | - | - | - | ||
| Per employee payroll cost | ||||||
| Net % "risen" | 2/2005 | 16 | 10 | 15 | 14 | |
| Prior qtr. | - | - | - | - | ||
| Employee cost pressures (greater) | ||||||
| % Wages | 2/2005 | 57 | 61 | 58 | 61 | |
| Prior qtr. | - | - | - | - | ||
| % Benefits | 2/2005 | 24 | 23 | 24 | 25 | |
| Prior qtr. | - | - | - | - | ||
| N.C. | S.C. | Tenn. | Va. | |||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 2/2005 | 41 | 41 | 41 | 42 | |
| Prior qtr. | - | - | - | - | ||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 2/2005 | 47 | 42 | 40 | 36 | |
| Prior qtr. | - | - | - | - | ||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 2/2005 | 48 | 41 | 31 | 41 | |
| Prior qtr. | - | - | - | - | ||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 2/2005 | 58 | 58 | 56 | 52 | |
| Prior qtr. | - | - | - | - | ||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 2/2005 | 40 | 41 | 36 | 43 | |
| Prior qtr. | - | - | - | - | ||
| % All credit needs not satisfied | 2/2005 | 6 | 7 | 5 | 5 | |
| Prior qtr. | - | - | - | - | ||
| % No credit needs | 2/2005 | 51 | 48 | 56 | 49 | |
| Prior qtr. | - | - | - | - | ||
| N.C. | S.C. | Tenn. | Va. | |||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 2/2005 | 54 | 49 | 49 | 42 | |
| Prior qtr. | - | - | - | - | ||
| Selling prices (last three months) | ||||||
| Net % increased | 2/2005 | 17 | 16 | 17 | 14 | |
| Prior qtr. | - | - | - | - | ||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 2/2005 | 17 | 13 | 10 | 13 | |
| Prior qtr. | - | - | - | - | ||
| Single most important business problem | ||||||
| % Weak sales | 2/2005 | 11 | 10 | 9 | 7 | |
| Prior qtr. | - | - | - | - | ||
| % Taxes | 2/2005 | 9 | 11 | 12 | 10 | |
| Prior qtr. | - | - | - | - | ||
| % Employee quality/costs | 2/2005 | 11 | 11 | 12 | 11 | |
| Prior qtr. | - | - | - | - | ||
| % Insurance | 2/2005 | 15 | 19 | 14 | 15 | |
| Prior qtr. | - | - | - | - | ||
| % Big-business competition | 2/2005 | 15 | 13 | 15 | 16 | |
| Prior qtr. | - | - | - | - | ||
| % Inflation/Rising prices | 2/2005 | 16 | 12 | 12 | 8 | |
| Prior qtr. | - | - | - | - | ||
| % Credit availability/Interest rates | 2/2005 | 4 | 3 | 4 | 6 | |
| Prior qtr. | - | - | - | - | ||
| % Regulations/Red tape | 2/2005 | 5 | 7 | 6 | 9 | |
| Prior qtr. | - | - | - | - | ||
| North Carolina Quarterly Spotlight | |
| Over the last year, which type of business insurance has had the most rapidly rising premiums? | |
| Vehicle collision and liability | 14% |
| Workers' compensation | 11% |
| Product or professional liability | 9% |
| Property and casualty | 11% |
| Employee health | 37% |
| Don't know/Refused | 18% |
| Total | 100% |
| Did your business suffer significant, minor or no physical damage from the hurricanes that struck last year? | |
| Significant | 6% |
| Minor | 13% |
| No | 81% |
| Don't know/Refused | 0% |
| Total | 100% |
The Poll
NFIB’s North Carolina Small-Business ConditionsSM is a telephone survey of a random sample of North Carolina 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.
