Release Date: 09/ 01/ 2005
CONTACT: Kevin Shivers, (717) 232-8582 or Jim Jennings, (240) 645-4099
HARRISBURG, Pa. -- A decreasing number of small-business owners, a net 10 percent (percent positive minus percent negative), believe that Pennsylvania’s business environment supports their efforts, according to the August Pennsylvania Small Business ConditionsSM economic survey by the National Federation of Independent Business. That figure is down from a net 22 percent reported in May’s survey and ranks at or below neighboring states of Maryland, New Jersey, New York and Ohio. The report’s data, released today by NFIB/Pennsylvania, provides an overview of small-business conditions within Pennsylvania and compares them with neighboring states.
Rising business costs dampened owner assessments. Fifty-nine percent said their costs for goods and services increased over the past three months, while only a net 18 percent were able to pass at least some of those costs on to their customers. The inability to pass on prices signals a likely profits squeeze in the coming months. Rising energy prices and greater employee cost pressures are contributing to this development.
“The high cost of doing business in Pennsylvania -- taxes, increasing purchasing prices, insurance costs and payroll costs -- is clearly affecting small-business optimism,” said Kevin Shivers, NFIB/Pennsylvania state director. “As a consequence, Pennsylvania’s small businesses appear to be holding back on business investments, new technologies and training relative to those in neighboring states. That damages the state’s long-term competitive position and makes it harder to hire new people.”
Despite these dismal results, a net 52 percent of business owners surveyed offered a positive outlook for business in the next three months. Most of those reported sales prospects and greater productivity as reasons for their optimism. Neighboring states Maryland, New Jersey, and New York scored higher on the business outlook question with a net 65, 62 and 53 respectively, reporting that the outlook for the remainder of the year was “good.” However, Pennsylvania’s owners were more optimistic than those in Ohio, where just a net 49 percent assessed the outlook as “good.”
Businesses reported that insurance costs and taxes were their most pressing business problems.
The Small Business Conditions 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.
| Pennsylvania Small-Business ConditionsSM | ||||||
| This chart shows the results from Pennsylvania and its comparative standing among selected nearby states. | ||||||
| Pa. | Md. | N.J. | N.Y. | Ohio | ||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 8/2005 | 10 | 21 | 11 | 12 | 11 |
| Prior qtr. | 22 | 26 | 11 | 0 | 8 | |
| Business conditions in market area | ||||||
| Net % "good" | 8/2005 | 30 | 53 | 43 | 29 | 20 |
| Prior qtr. | 30 | 53 | 38 | 22 | 23 | |
| Net % "improving" | 8/2005 | 1 | 16 | 7 | 9 | 2 |
| Prior qtr. | 0 | 18 | 13 | 0 | 4 | |
| Outlook for business | ||||||
| Net % "good" in next three months | 8/2005 | 52 | 65 | 62 | 53 | 49 |
| Prior qtr. | 53 | 67 | 57 | 47 | 51 | |
| Reason for optimism | ||||||
| % Sales prospects | 8/2005 | 41 | 43 | 42 | 47 | 50 |
| Prior qtr. | 37 | 40 | 39 | 48 | 40 | |
| % Lower costs | 8/2005 | 4 | 5 | 3 | 3 | 4 |
| Prior qtr. | 1 | 4 | 2 | 4 | 2 | |
| % Price increases | 8/2005 | 5 | 5 | 5 | 7 | 2 |
| Prior qtr. | 4 | 5 | 3 | 3 | 6 | |
| % Greater productivity | 8/2005 | 12 | 14 | 15 | 13 | 12 |
| Prior qtr. | 18 | 16 | 11 | 13 | 17 | |
| % Government policy | 8/2005 | 3 | 5 | 3 | 5 | 3 |
| Prior qtr. | 4 | 5 | 6 | 4 | 6 | |
| % Government policy | 8/2005 | 9 | 8 | 10 | 7 | 8 |
| Prior qtr. | - | - | - | - | - | |
| Reason for pessimism | ||||||
| % Sales prospects | 8/2005 | IC* | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Cost increases | 8/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Pressure on selling prices | 8/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Lower productivity | 8/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Government policies | 8/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| Pa. | Md. | N.J. | N.Y. | Ohio | ||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 8/2005 | 43 | 49 | 42 | 42 | 34 |
| Prior qtr. | 35 | 44 | 34 | 31 | 33 | |
| Profits | ||||||
| Net % profits "good" | 8/2005 | 22 | 33 | 31 | 26 | 13 |
| Prior qtr. | 21 | 27 | 21 | 10 | 17 | |
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 8/2005 | 21 | 22 | 22 | 23 | 17 |
| Prior qtr. | 19 | 23 | 22 | 21 | 17 | |
| Per employee payroll cost | ||||||
| Net % "risen" | 8/2005 | 21 | 17 | 17 | 19 | 12 |
| Prior qtr. | 15 | 12 | 16 | 16 | 9 | |
| Employee cost pressures (greater) | ||||||
| % Wages | 8/2005 | 44 | 53 | 49 | 48 | 50 |
| Prior qtr. | 51 | 59 | 49 | 45 | 52 | |
| % Benefits | 8/2005 | 36 | 27 | 33 | 29 | 33 |
| Prior qtr. | 31 | 25 | 32 | 31 | 30 | |
| Pa. | Md. | N.J. | N.Y. | Ohio | ||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 8/2005 | 38 | 45 | 46 | 46 | 40 |
| Prior qtr. | 43 | 43 | 38 | 41 | 40 | |
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 8/2005 | 38 | 40 | 41 | 46 | 40 |
| Prior qtr. | 42 | 36 | 37 | 40 | 39 | |
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 8/2005 | 38 | 42 | 40 | 43 | 39 |
| Prior qtr. | 40 | 42 | 34 | 35 | 35 | |
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 8/2005 | 50 | 51 | 53 | 55 | 50 |
| Prior qtr. | 52 | 49 | 51 | 45 | 50 | |
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 8/2005 | 37 | 37 | 35 | 32 | 37 |
| Prior qtr. | 43 | 45 | 40 | 35 | 36 | |
| % All credit needs not satisfied | 8/2005 | 4 | 6 | 6 | 10 | 6 |
| Prior qtr. | 4 | 5 | 5 | 6 | 7 | |
| % No credit needs | 8/2005 | 52 | 49 | 52 | 54 | 51 |
| Prior qtr. | 45 | 40 | 46 | 50 | 51 | |
| Pa. | Md. | N.J. | N.Y. | Ohio | ||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 8/2005 | 59 | 49 | 50 | 55 | 55 |
| Prior qtr. | 59 | 47 | 50 | 54 | 51 | |
| Selling prices (last three months) | ||||||
| Net % increased | 8/2005 | 18 | 18 | 18 | 18 | 16 |
| Prior qtr. | 18 | 21 | 18 | 14 | 17 | |
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 8/2005 | 10 | 12 | 9 | 11 | 8 |
| Prior qtr. | 11 | 11 | 13 | 11 | 12 | |
| Single most important business problem | ||||||
| % Weak sales | 8/2005 | 9 | 7 | 9 | 11 | 13 |
| Prior qtr. | 13 | 11 | 12 | 11 | 12 | |
| % Taxes | 8/2005 | 15 | 9 | 10 | 15 | 18 |
| Prior qtr. | 11 | 9 | 9 | 11 | 11 | |
| % Employee quality/costs | 8/2005 | 7 | 12 | 8 | 7 | 8 |
| Prior qtr. | 10 | 11 | 8 | 8 | 8 | |
| % Insurance | 8/2005 | 18 | 16 | 21 | 15 | 13 |
| Prior qtr. | 19 | 13 | 20 | 16 | 18 | |
| % Big-business competition | 8/2005 | 14 | 14 | 15 | 13 | 14 |
| Prior qtr. | 13 | 14 | 13 | 14 | 13 | |
| % Inflation/Rising prices | 8/2005 | 13 | 11 | 13 | 10 | 12 |
| Prior qtr. | 13 | 11 | 10 | 10 | 15 | |
| % Credit availability/Interest rates | 8/2005 | 3 | 4 | 2 | 3 | 3 |
| Prior qtr. | 3 | 4 | 3 | 1 | 3 | |
| % Regulations/Red tape | 8/2005 | 7 | 6 | 9 | 8 | 8 |
| Prior qtr. | 7 | 11 | 8 | 7 | 7 | |
* Insufficient cases
| Pennsylvania Quarterly Spotlight | |
| Is the PRIMARY reason for any cash flow problem generated in your business generally associated with:? | |
| The need to make large investments and wait for sales | 7% |
| Unexpected variations in sales or costs | 8% |
| Seasonality | 14% |
| Weak sales | 11% |
| Difficulty collecting money owed you | 18% |
| Don't experience cash flow problems | 28% |
| Other | 2% |
| Don't know/Refused | 12% |
| Total | 100% |
| Which is the ONE most important action you usually take to resolved a cash flow problem? Do you:? | |
| Draw on personal resources | 16% |
| Borrow | 11% |
| Adjust scheduled payments | 10% |
| Adjust schedules purchases | 16% |
| Try harder to collect money owed you | 26% |
| Other | 3% |
| Don't know/Refused | 20% |
| Total | 100% |
The Poll
NFIB’s Pennsylvania Small-Business ConditionsSM is a telephone survey of a random sample of Pennsylvania 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.
