Capital One Bank Quarterly Small Business Barometer Survey Finds Small Business Confidence Holding Steady
Small businesses continue to show improvements, remain steady, but express concerns for remainder of the year, according to second quarter 2012 survey data
The majority of small businesses report that their business financials have remained stable or improved, with 44 percent reporting improved financial position compared to one year ago. However, small business perceptions regarding local economic conditions remain relatively unchanged and, despite the improvement in company financials, the data shows small business owners are less optimistic about business prospects in the months ahead. The national business outlook indicates that concerns over sales and price margins, have diminished small business confidence in their prospects for the remainder of 2012.
“This quarter’s survey results suggest that business is generally
holding steady for small businesses; the current economic environment
and overall business performance continue to hold their own or improve,
and while hiring is far short of pre-recession levels, we’re seeing
small businesses making plans to hire new employees in numbers that are
among the highest we’ve seen in the past two years,” said
Financial Performance and Spending
Economic conditions for small businesses nationally are holding steady. Nearly half (45 percent) of small businesses report that economic conditions for their business are about the same, a two-point increase from the previous quarter and one point lower than in the second quarter of 2011. More than a third (38 percent) of small businesses report improving economic conditions. This is one point lower than last quarter and six points lower than the two-year high of 44 percent last year (Q2 2011). While a majority of small businesses believe economic conditions are the same or improving, a sizable portion of small businesses (17 percent) believe economic conditions are getting worse.
The majority of small businesses are in a better financial position than last year. Forty-four percent of small businesses say their firm's financial position is better than a year ago. This is a two-point increase from the previous quarter, and higher than those who say that their position is about the same (40 percent). Only fifteen percent of small businesses say their financial position has gotten worse. This is two points lower than the previous quarter, but is still six points higher than the two-year low of 9 percent set in Q2 2011.
Economic Outlook and Business Pressures
Small business perceptions of the economic outlook for business prospects over the next six months show that owners are mildly optimistic. The national business outlook is a measure of business prospects over the next six months on a scale of significantly worse (1) to significantly better (10). Even though they are faced with favorable economic conditions and better financial performance, small businesses rate the national business outlook at 6.0 out of 10 points, 0.4 points lower than the 6.4 from the previous quarter. Conversely, all business indicators are having a larger impact on business prospects than last quarter. Price margins are expected to have the most impact on business prospects, also having the largest change since last quarter (0.7-point increase).
Hiring & Spending Outlook
Across the country, more small businesses are forecasting increases in hiring employees in the next six months. More than a third (37 percent) of small businesses plan to hire additional employees, a two-year high. This is two points higher than last year (Q2 2011) and three points higher than last quarter (Q1 2012). Difficulty in finding the right talent to fill available openings remains relatively consistent with last quarter. Sixteen percent of small businesses say they have job openings they are unable to fill, up one point from the previous quarter.
The majority of small businesses will keep spending, business development and investment consistent. Seven in ten of the country’s small businesses plan to keep spending at the same levels, the highest amount in the last two years. This is a nine-point increase from the previous quarter and five points higher than it was one year ago. This shift parallels the decrease of small businesses that plan to increase spending. Only 15 percent of small businesses forecast increasing business development and investment spending, 10 points lower than the previous quarter and 12 points lower than the two-year high of 27 percent one year ago.
Availability of Financing
In the second-quarter survey, a quarter of U.S. small businesses reported they have tried to obtain financing in the last 12 months. This figure, the highest it has been over the last nine quarters of survey data, is two points higher than the previous quarter and nine points higher than one year ago (Q2 2011). Among businesses seeking to obtain financing over the last twelve months, the manufacturing and construction sectors represent the highest percentage of those seeking the extra support. More than two-fifths (42%) of small businesses report that obtaining financing is harder than it was six months ago, a decrease of 10 points from the previous quarter. Less than one-in-ten (9 percent) of small businesses report that obtaining financing is easier than it was six months ago, a decrease of 5 points from the previous quarter.
The findings reported in this release are from a telephone survey
conducted by the opinion research firm,
About Capital One
Capital One Financial Corporation
Steve Schooff, 212-216-8984