Small Business Sentiment Slightly Up; However, Sales Volume and Profit Margins Stay Down

Tue, Jun 15, 2010

Job Creation, Workplace

A recent NFIB survey finds small business sentiment slightly improving, but also that most small businesses are losing sales and giving up profit margin to stay alive.

U.S. small businesses are slightly more optimistic about their economic outlook than they have been in the last two years but are still not ready to expand staffs and boost capital spending, according to a survey released Tuesday.

“The recovery in optimism we are currently experiencing is very weak compared to recoveries after 1982 or 1975,” the survey concluded. “The May Optimism index is a shade better than April but remains well below the other recovery trajectories.”

The NFIB survey of 823 businesses through the end of May showed that more small businesses are experiencing weakening sales than are enjoying sales improvement. Widespread price cutting was also reported, it said. May was the 18th consecutive month in which more business owners reported cutting average selling prices than raising them.

Eighteen straight months of price cuts.  You’re not going to get expanded hiring and capital investment when your margins are compressing simultaneously with a sales decline.

Unfortunately, we look like we are on our way to having a double-dip recession.

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