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US Country Risk Climate:  Small Business Remains Unconvinced

Risk iStock_000016809464SmallAccording to the National Federation of Independent Business the majority of those in their polls are still far more cautious than excited and most are anticipating that conditions will worsen before getting substantially better. These are the companies that employ 500 or fewer people and they are the most important contributors to the hiring numbers from quarter to quarter.

The reluctance on the part of these companies to add to their payrolls is a prime reason for the sluggish jobs data from month to month and these are often the companies that are closest to their consumer and thus have a good sense of where these buyers are from one week to the next.  The reluctance on the part of the small business has also slowed the rate of business investment as these companies are not buying new machinery or investing much in new construction. There has been a lot to celebrate about the economy of late but growth in this sector is not one of them. The latest survey numbers are not awful but they are down from the numbers at the start of the year when the index hit 96.6. The latest reading is 95.1 and that suggests that the growth in enthusiasm has stopped but there has not been a major retreat either.

The word of the day seems to be caution – a sense that things could get better but they could just as easily get worse and few want to bet a lot of money on hoping for the best. In the last few weeks there have been some improved reports coming from the retail community as a whole, but it isn’t clear that this will be enough to buoy the spirits of the small companies.

On the plus side the small businesses are hiring people to replace those who have left even as they resist adding more staff. For a few years the majority of the small businesses were allowing attrition to do its work and they rarely replaced people as they quit and retired. Now they are at a point where they can’t function without replacement workers and that has had an impact on hiring.

Courtesy:  Armada Corporate Intelligence

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