SBET: Near-Record Hiring By Small Firms in Novembe
Washington, DC, December 12, 2006--Fewer job openings, lower profit gains and fading inventory investment trimmed the National Federation of Independent Business Small-Business Optimism Index a point to 99.7 in November (1986=100).
Although job openings declined five points to 22 percent, that component of the index remained at historically high levels, and job-creation plans climbed while inflationary pressures edged slightly upward.
More than half of the owners surveyed hired or tried to hire one or more employees, unchanged from October, but still one of the highest expansion readings. Eight of 10 owners reported few or no qualified applicants for unfilled positions, and average employment increases were weaker than October. A net 12 percent said availability of qualified labor was their top business problem, down three points.
With the exception of the dot com boom, the survey indicated the highest job-creation level in its history: during the next three months, 18 percent plan to create new jobs, while only six percent plan reductions, yielding a seasonally-adjusted net 19 percent (net 12 percent seasonally unadjusted) planning to create new jobs. Job-creation plans are positive in all industries.
Weaker sales, fewer price hikes and increases in worker compensation drove the net-percent of firms reporting earnings improvements down four points to a minus 18 percent. A net one-fourth raised worker compensation, up two points from October.
Of the 21 percent reporting higher earnings, nearly two-thirds cited stronger sales and 5 percent each credited lower materials costs, higher selling prices and regulatory costs. Thirty-seven percent had lower earnings compared to the previous three months. Of those, 38 percent blamed weaker sales, 16 percent cited higher energy costs, eight percent noted lower sales prices, five percent pointed to more expensive insurance and three percent each claimed their taxes and regulatory costs, respectively, were higher.
Inventory accumulation, seasonally adjusted, remained flat in November. A net-negative six percent of owners reported stocks too low, three points worse than October.
Unadjusted, construction firms having gains grew five points to 11 percent (many small contractors are involved in home repair and/or remodeling), while 17 percent reported reductions, reflecting liquidation of an excess supply of new homes and related reductions in materials.
Sales gains were noted by 30 percent while 27 reported lower sales, producing a seasonally adjusted net zero percent of all firms with higher sales in the most recent three-month period. In construction, nearly two-fifths boasted higher sales; 24 percent said the opposite, suggesting that liquidation is in process.
Expected real-sales volumes rose an additional four points to a net 21 percent, seasonally adjusted. Overall, indications are that inventories are still too high. The share intending to increase stocks fell four points to a net zero percent, seasonally-adjusted. Excessive current holdings are viewed as adequate.
Capital-spending plans held at 31 percent of owners. The frequency of capital outlays over the past six months fell five points to 57 percent. Forty-two percent made new equipment purchases, 21 percent added vehicles, 16 percent improved or expanded facilities, 13 percent bought new fixtures and furniture and 5 percent acquired new buildings or land.
Seventeen percent see the current period as a good time to expand facilities, down three points and consistent with the lower frequency of reported capital expenditures.
