Release Date: 09/ 01/ 2005
CONTACT: Gregg Thompson, (919) 844-6342 or Jim Brown, (615) 874-5288
Payroll Costs Jump, Inflationary Pressure Impacting North Carolina Entrepreneurs
RALEIGH, N.C. -- North Carolina’s business conditions held firm despite various pressures, but optimism from small-business owners is waning, according to this quarter’s North Carolina Small-Business ConditionsSM. The report’s data, which was released today by the National Federation of Independent Business/North Carolina, provides an overview of small-business conditions within North Carolina and compares them with neighboring states.
A net 43 percent (positive percent minus negative percent) of respondents in August said business conditions are “good,” down only one percentage point from June. The figure was similar to readings in South Carolina (net 45 percent) and Tennessee (net 40 percent), but was dwarfed by Virginia’s reading (net 62 percent). Optimism faded, however, dropping to a net 14 percent, which compared to a net 25 percent in June.
“Business is still brisk, but there’s a silver lining in the clouds,” NFIB/North Carolina State Director Gregg Thompson. “Entrepreneurs are not as optimistic as they were earlier in the year, which is an indication our economy may be leveling off to some extent. Certainly, small-business owners are experiencing more cost pressures than they were in the spring, and it is no secret small businesses are coping with rising gas prices.”
Thompson pointed to rising payroll costs as a concern, noting 20 percent of respondents are experiencing added payroll demands, up from 12 percent in the June survey. A net 54 percent said average prices paid for goods and services “increased,” up from a net 51 percent in June. Inflation and rising prices (12 percent) is the No. 4 business problem for small business in North Carolina, behind only insurance (17 percent), big-business competition (14 percent) and taxes (13 percent).
Sales improved and profits held steady. A net 50 percent indicated that sales were “good,” up from a net 45 percent last quarter, while a net 32 percent characterized profits as “good,” which was unchanged from June. A net 65 percent said the outlook for business is “good” over the next three months, also unchanged from last quarter.
Employers who would give a compensation increase equivalent to $1 said they would do so in the form of wages or salary (59 percent), health benefits (7 percent), retirement benefits (5 percent), paid leave (5 percent) or some other way (9 percent). If employees were allowed to choose, employers said they would want the $1 to go to wages or salary (70 percent), health benefits (11 percent), retirement benefits (3 percent), paid leave (3 percent) or some other way (2 percent).
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 | 5/2005 | 38 | 40 | 32 | 41 | |
| Prior qtr. | 42 | 38 | 32 | 32 | ||
| Business conditions in market area | ||||||
| Net % "good" | 5/2005 | 43 | 45 | 40 | 62 | |
| Prior qtr. | 44 | 45 | 44 | 48 | ||
| Net % "improving" | 5/2005 | 14 | 14 | 6 | 27 | |
| Prior qtr. | 25 | 22 | 14 | 20 | ||
| Outlook for business | ||||||
| Net % "good" in next three months | 5/2005 | 65 | 62 | 62 | 73 | |
| Prior qtr. | 65 | 69 | 61 | 69 | ||
| Reason for optimism | ||||||
| % Sales prospects | 5/2005 | 43 | 40 | 37 | 49 | |
| Prior qtr. | 39 | 43 | 45 | 42 | ||
| % Lower costs | 5/2005 | 2 | 3 | 3 | 2 | |
| Prior qtr. | 3 | 4 | 2 | 4 | ||
| % Price increases | 5/2005 | 4 | 3 | 4 | 2 | |
| Prior qtr. | 4 | 3 | 2 | 3 | ||
| % Greater productivity | 5/2005 | 18 | 17 | 16 | 9 | |
| Prior qtr. | 12 | 15 | 15 | 15 | ||
| % Government policy | 5/2005 | 4 | 1 | 4 | 5 | |
| Prior qtr. | 4 | 3 | 4 | 4 | ||
| % Seasonal/Weather | 5/2005 | 9 | 11 | 10 | 10 | |
| Prior qtr. | - | - | - | - | ||
| Reason for pessimism | ||||||
| % Sales prospects | 5/2005 | IC* | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Cost increases | 5/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Pressure on selling prices | 5/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Lower productivity | 5/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Government policies | 5/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| N.C. | S.C. | Tenn. | Va. | |||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 5/2005 | 50 | 55 | 41 | 56 | |
| Prior qtr. | 45 | 49 | 36 | 50 | ||
| Profits | ||||||
| Net % profits "good" | 5/2005 | 32 | 40 | 27 | 37 | |
| Prior qtr. | 32 | 34 | 24 | 33 | ||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 5/2005 | 15 | 17 | 20 | 26 | |
| Prior qtr. | 19 | 21 | 15 | 21 | ||
| Per employee payroll cost | ||||||
| Net % "risen" | 5/2005 | 17 | 15 | 15 | 19 | |
| Prior qtr. | 12 | 12 | 13 | 18 | ||
| Employee cost pressures (greater) | ||||||
| % Wages | 5/2005 | 54 | 57 | 59 | 58 | |
| Prior qtr. | 57 | 60 | 53 | 61 | ||
| % Benefits | 5/2005 | 28 | 23 | 24 | 27 | |
| Prior qtr. | 24 | 21 | 29 | 25 | ||
| N.C. | S.C. | Tenn. | Va. | |||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 5/2005 | 44 | 37 | 41 | 43 | |
| Prior qtr. | 34 | 42 | 40 | 41 | ||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 5/2005 | 43 | 41 | 39 | 41 | |
| Prior qtr. | 42 | 35 | 38 | 43 | ||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 5/2005 | 42 | 43 | 39 | 39 | |
| Prior qtr. | 41 | 35 | 36 | 37 | ||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 5/2005 | 52 | 54 | 49 | 47 | |
| Prior qtr. | 49 | 50 | 56 | 51 | ||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 5/2005 | 39 | 38 | 35 | 37 | |
| Prior qtr. | 39 | 40 | 43 | 43 | ||
| % All credit needs not satisfied | 5/2005 | 5 | 6 | 6 | 7 | |
| Prior qtr. | 7 | 5 | 5 | 6 | ||
| % No credit needs | 5/2005 | 52 | 49 | 53 | 50 | |
| Prior qtr. | 48 | 50 | 47 | 45 | ||
| N.C. | S.C. | Tenn. | Va. | |||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 5/2005 | 54 | 53 | 58 | 56 | |
| Prior qtr. | 51 | 51 | 52 | 50 | ||
| Selling prices (last three months) | ||||||
| Net % increased | 5/2005 | 14 | 14 | 13 | 18 | |
| Prior qtr. | 15 | 21 | 17 | 16 | ||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 5/2005 | 9 | 9 | 10 | 13 | |
| Prior qtr. | 11 | 9 | 11 | 11 | ||
| Single most important business problem | ||||||
| % Weak sales | 5/2005 | 9 | 11 | 8 | 8 | |
| Prior qtr. | 10 | 9 | 10 | 12 | ||
| % Taxes | 5/2005 | 13 | 14 | 13 | 11 | |
| Prior qtr. | 10 | 13 | 11 | 11 | ||
| % Employee quality/costs | 5/2005 | 10 | 7 | 10 | 13 | |
| Prior qtr. | 8 | 9 | 9 | 9 | ||
| % Insurance | 5/2005 | 17 | 16 | 19 | 12 | |
| Prior qtr. | 17 | 14 | 15 | 12 | ||
| % Big-business competition | 5/2005 | 14 | 11 | 11 | 17 | |
| Prior qtr. | 14 | 13 | 15 | 18 | ||
| % Inflation/Rising prices | 5/2005 | 12 | 15 | 13 | 15 | |
| Prior qtr. | 16 | 16 | 14 | 14 | ||
| % Credit availability/Interest rates | 5/2005 | 3 | 3 | 2 | 3 | |
| Prior qtr. | 2 | 3 | 4 | 3 | ||
| % Regulations/Red tape | 5/2005 | 8 | 6 | 8 | 6 | |
| Prior qtr. | 5 | 8 | 8 | 6 | ||
* Insufficient cases
| North Carolina Quarterly Spotlight | |
| If you could 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 | 59% |
| Health benefits | 7% |
| Retirement benefits | 5% |
| Paid leave | 5% |
| Or, some other way? | 9% |
| Wouldn't give increase | 5% |
| Don't know/Refused | 10% |
| 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 | 70% |
| Health benefits | 11% |
| Retirement benefits | 3% |
| Paid leave | 3% |
| Or, some other way? | 2% |
| Wouldn't give increase | 3% |
| Don't know/Refused | 8% |
| 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.
