NOV 9, 2011 14:54 EST (Reuters) - Many small business owners in the United States are reluctant to hire more employees in the near term as economic uncertainty and sagging sales continue to put pressure on company balance sheets, the latest index on small business optimis from the National Federation of Independent Business shows.
Of the 2,077 small businesses in NFIB’s membership surveyed, the number of companies planning to increase staff is down two percentage points to just 9%, while 12% plan to reduce their workforce over the next three months. The report also shows employment has been reduced for the fifth month in a row with an average reduction of 0.1 workers per company.
“Small businesses seem to have the right number of employees,” says Holly Wade, senior policy analyst at the NFIB. “They’re breaking even. But until they see a pick-up in consumer spending there’s no reason to hire.”
Economic uncertainty is affecting consumer confidence and in turn small businesses. Twenty-six percent of business owners surveyed said poor sales are their main concern.
Wade doesn’t see anything inspiring more consumer confidence in the near future. “We don’t see anything on the horizon that would get small businesses to hire more and consumers to spend more,” she says.
At the same time, Sageworks has seen an increase in private company profit per employee with average profit per employee rising by 50% since 2009. The profit per employee has so far been $15,000 this year.
“Private companies have seen revenue growth between 4 and 6%,” said Libby Bierman, an analyst with Sageworks. “The companies are growing, but they’re not adding a lot of employees.”
Bierman believes businesses are being very careful when it comes to any big investments such as increasing their staff.
“They’re testing their growth,” says Bierman. “Until they feel sure they won’t make this investment (hiring more employees).”
© 2010 Thomson Reuters. Click for Restrictions.
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