Release Date: 12/ 01/ 2005
CONTACT: Bill G. Smith, (608) 255-6083 or Michael Diegel, (202) 554-9000
Owners' three-month business outlook again declines notably, while business conditions remain flat
MADISON, Wis. -- Wisconsin's small-business owners are pessimistic about the state's business climate, conditions and outlook for the next quarter's prospects, according to the Wisconsin Small-Business ConditionsSM. The report's data, which was released today by the National Federation of Independent Business/Wisconsin provides an overview of small-business conditions within Wisconsin and compares them with neighboring states.
Only a net 23 percent (percent positive minus percent negative) of the state's small employers said the overall business environment is "supportive," up slightly from a net 17 percent in September, though fewer respondents saw business conditions improving during the quarter, a net 4 percent compared to a net 6 percent last quarter. Most troubling, just a bare majority, a net 51 percent, characterized the outlook for business over the next three months as "good," down from a net 60 percent in September and net 68 percent in June.
"The three-month business outlook of small-business owners continues to fall, and their assessment of the business climate and conditions in Wisconsin remains fair at best," said Bill G. Smith, state director for NFIB/Wisconsin. "With owners continuing to report rising costs, notably energy and the perennial problem of insurance, it's little wonder small business is feeling the pressure. Yet, just a fifth of small businesses report raising customer prices."
A net 63 percent of small employers reported that over the last three months their purchasing costs rose, the same as September. However, the number of respondents who reported that they had raised their prices was just a net 21 percent, putting increased pressure on profits.
An overwhelming 75 percent reported that the recent run-up in energy prices has had a negative effect on their business. Twenty-five percent of small-business owners are coping with the increase by reducing energy use, 17 percent raised prices, and 16 percent are absorbing those costs in the form of lower earnings.
Further, the job outlook for employment declined slightly, with the number of respondents who said they had one or more job openings falling from 24 percent in September to 21 percent in December. Among neighboring states, only Illinois and Michigan were seen as less supportive of small business and having worse business conditions, while only Michigan reported a worse three-month outlook.
| Wisconsin Small-Business ConditionsSM | ||||||
| This chart shows the results from Wisconsin and its comparative standing among selected nearby states. | ||||||
| Wis. | Ill. | Iowa | Mich. | Minn. | ||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 11/2005 | 23 | 12 | 37 | 4 | 27 |
| Prior qtr. | 17 | 18 | 32 | 8 | 17 | |
| Business conditions in market area | ||||||
| Net % "good" | 11/2005 | 35 | 24 | 40 | -2 | 35 |
| Prior qtr. | 36 | 31 | 41 | 2 | 33 | |
| Net % "improving" | 11/2005 | 4 | 0 | 4 | -9 | -3 |
| Prior qtr. | 6 | 8 | 5 | -5 | 3 | |
| Outlook for business | ||||||
| Net % "good" in next three months | 11/2005 | 51 | 51 | 57 | 35 | 55 |
| Prior qtr. | 60 | 51 | 55 | 40 | 53 | |
| Reason for optimism | ||||||
| % Sales prospects | 11/2005 | 45 | 47 | 42 | 49 | 51 |
| Prior qtr. | 49 | 49 | 41 | 42 | 43 | |
| % Lower costs | 11/2005 | 7 | 4 | 6 | 4 | 3 |
| Prior qtr. | 2 | 3 | 1 | 3 | 2 | |
| % Price increases | 11/2005 | 5 | 2 | 4 | 2 | 3 |
| Prior qtr. | 3 | 1 | 2 | 2 | 3 | |
| % Greater productivity | 11/2005 | 14 | 16 | 16 | 13 | 19 |
| Prior qtr. | 11 | 16 | 17 | 11 | 14 | |
| % Government policy | 11/2005 | 6 | 3 | 5 | 2 | 2 |
| Prior qtr. | 2 | 2 | 2 | 4 | 2 | |
| % Seasonality; weather | 11/2005 | 10 | 12 | 13 | 16 | 9 |
| Prior qtr. | 10 | 11 | 9 | 10 | 14 | |
| Reason for pessimism | ||||||
| % Sales prospects | 11/2005 | IC* | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Cost increases | 11/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Pressure on selling prices | 11/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Lower productivity | 11/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Government policies | 11/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| Wis. | Ill. | Iowa | Mich. | Minn. | ||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 11/2005 | 41 | 36 | 43 | 20 | 41 |
| Prior qtr. | 42 | 39 | 43 | 22 | 44 | |
| Profits | ||||||
| Net % profits "good" | 11/2005 | 22 | 16 | 26 | 4 | 16 |
| Prior qtr. | 22 | 22 | 25 | 0 | 18 | |
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 11/2005 | 21 | 17 | 21 | 15 | 19 |
| Prior qtr. | 24 | 18 | 18 | 17 | 23 | |
| Per employee payroll cost | ||||||
| Net % "risen" | 11/2005 | 19 | 14 | 16 | 10 | 24 |
| Prior qtr. | 20 | 17 | 18 | 8 | 21 | |
| Employee cost pressures (greater) | ||||||
| % Wages | 11/2005 | 55 | 51 | 57 | 49 | 55 |
| Prior qtr. | 49 | 51 | 56 | 50 | 51 | |
| % Benefits | 11/2005 | 33 | 31 | 26 | 32 | 30 |
| Prior qtr. | 35 | 34 | 28 | 31 | 30 | |
| Wis. | Ill. | Iowa | Mich. | Minn. | ||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 11/2005 | 45 | 44 | 40 | 43 | 45 |
| Prior qtr. | 41 | 45 | 38 | 38 | 47 | |
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 44 | 44 | 44 | 36 | 46 |
| Prior qtr. | 45 | 43 | 43 | 35 | 46 | |
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 44 | 42 | 37 | 39 | 42 |
| Prior qtr. | 44 | 39 | 40 | 36 | 41 | |
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 11/2005 | 51 | 53 | 54 | 52 | 55 |
| Prior qtr. | 54 | 54 | 52 | 53 | 53 | |
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 11/2005 | 45 | 42 | 50 | 39 | 41 |
| Prior qtr. | 43 | 40 | 41 | 31 | 43 | |
| % All credit needs not satisfied | 11/2005 | 9 | 5 | 7 | 10 | 6 |
| Prior qtr. | 6 | 5 | 6 | 7 | 5 | |
| % No credit needs | 11/2005 | 42 | 49 | 39 | 47 | 47 |
| Prior qtr. | 48 | 49 | 47 | 55 | 43 | |
| Wis. | Ill. | Iowa | Mich. | Minn. | ||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 11/2005 | 63 | 62 | 69 | 67 | 59 |
| Prior qtr. | 63 | 51 | 59 | 55 | 56 | |
| Selling prices (last three months) | ||||||
| Net % increased | 11/2005 | 21 | 20 | 23 | 19 | 16 |
| Prior qtr. | 22 | 14 | 15 | 10 | 19 | |
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 11/2005 | 11 | 13 | 11 | 12 | 10 |
| Prior qtr. | 9 | 9 | 9 | 9 | 9 | |
| Single most important business problem | ||||||
| % Weak sales | 11/2005 | 10 | 12 | 8 | 20 | 14 |
| Prior qtr. | 11 | 9 | 9 | 17 | 13 | |
| % Taxes | 11/2005 | 9 | 10 | 11 | 8 | 9 |
| Prior qtr. | 12 | 13 | 10 | 11 | 11 | |
| % Employee quality/costs | 11/2005 | 8 | 9 | 9 | 8 | 9 |
| Prior qtr. | 9 | 8 | 8 | 7 | 7 | |
| % Insurance | 11/2005 | 23 | 16 | 19 | 13 | 17 |
| Prior qtr. | 20 | 14 | 20 | 17 | 18 | |
| % Big-business competition | 11/2005 | 17 | 12 | 14 | 14 | 13 |
| Prior qtr. | 13 | 15 | 18 | 11 | 14 | |
| % Inflation/Rising prices | 11/2005 | 14 | 16 | 15 | 18 | 14 |
| Prior qtr. | 12 | 11 | 11 | 14 | 14 | |
| % Credit availability/Interest rates | 11/2005 | 1 | 3 | 3 | 3 | 3 |
| Prior qtr. | 1 | 3 | 2 | 3 | 3 | |
| % Regulations/Red tape | 11/2005 | 7 | 7 | 8 | 5 | 6 |
| Prior qtr. | 8 | 9 | 9 | 5 | 7 | |
| Wisconsin Quarterly Spotlight | |
| What has been the impact on your business of the recent run-up in energy prices? | |
| Seriously negative | 21% |
| Somewhat negative | 27% |
| Slightly negative | 27% |
| No impact | 18% |
| Positive | 2% |
| Don't know/Refused | 5% |
| Total | 100% |
| What is the single most important action you have taken to offset rising energy costs? | |
| Raised selling prices | 17% |
| Invested in energy-conserving equipment or vehicles | 8% |
| Reduced energy use | 25% |
| Absorbed costs with lower earnings | 16% |
| Reduced non-energy costs such as payroll | 9% |
| Other | 10% |
| DK/Ref | 15% |
| Total | 100% |
The Poll
NFIB’s Wisconsin Small-Business ConditionsSM is a telephone survey of a random sample of Wisconsin 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.
