Survey: Small Businesses See Economic Rebound

   (Business Wire) - 8/14/2014 - More small business owners think we are in an economic rebound and are indicating a slight uptick in business activity since the April survey, but are more conservative in adding new products and services, according to the most recent Business Confidence Survey released by Insperity, Inc. (NYSE:NSP), a leading provider of human resources and business performance solutions for America’s best businesses. Slightly more than 41 percent now plan to add employees compared to 39 percent in April and 50 percent in January; 54 percent are maintaining current staffing levels versus 57 percent last quarter and 47 percent in January; and nearly 5 percent are planning layoffs, compared to 4 percent in April.
    Insperity also announced compensation metrics from its base of 5,300 small and medium-sized Workforce Optimization clients. Average compensation for the second quarter of 2014 increased 1.6 percent over the second quarter of 2013, while bonuses were down 3.2 percent compared to the 2013 period. Average commissions received by worksite employees reflected a decrease of 2.0 percent versus a 6.2 percent increase in the second quarter of 2013. Overtime pay was 10.6 percent of regular pay, above the 10 percent level that generally indicates a need for additional employees, and up from 9.4 percent in the second quarter of 2013.
    In the survey, 79 percent of respondents expect to meet or exceed the 2014 performance objectives they set in January, the same as in April but down from 92 percent in January; 21 percent expect to do worse in 2014, again matching the last survey but up sharply from 8 percent in January. Concerning the timing of an economic rebound, nearly 42 percent think one is currently in process versus 33 percent in April; 22 percent expect a rebound in the fourth quarter of 2014 or later, and 36 percent are unsure versus 44 percent in April.
    Concerning their current profit-generating activities, 71 percent list selling new accounts and 66 percent cite increased service to existing clients, nearly the same as last quarter for each. This was followed by 46 percent who indicate adding new services or products, and 29 percent list investing in new improvements, both of which were down from April.
    “Consensus for an economic rebound is building and overtime pay is now more than 10 percent. This would normally indicate a need for additional workers, but our latest survey reveals that business owners have not become aggressive in acting on that information,” said Paul J. Sarvadi, Insperity chairman and chief executive officer. “Small business may be awaiting further leading confirmation such as an increase in average commissions, which is remaining relatively low.”
    The list of short-term concerns shifted somewhat, with hiring the right people now listed by 50 percent of respondents, while the economy dropped to second at 48 percent. Rising health care costs was third at 47 percent, while controlling overall operational costs moved into fourth place at 44 percent, displacing government health care reform. Government expansion again topped the list of long-term concerns at 57 percent; potential tax increases came in at 51 percent; the federal deficit at 50 percent; and the economy at 42 percent.
    When asked about their pipelines for new business through 2014, 56 percent of survey respondents expected sales to increase, down from 60 percent in April and 66 percent in January; 33 percent anticipate no change versus 28 percent last quarter; 4 percent predict decreasing sales and 7 percent are unsure.
    The survey results show that 28 percent plan to increase employee compensation, down from 29 percent in April and 46 percent in January; 62 percent plan to maintain compensation at current levels, up from 60 percent last quarter and 43 percent in January; 1 percent again expect decreases; and 9 percent are unsure.
    Insperity conducted the survey July 8 – 10, 2014, of chief executive officers, chief financial officers and other executives in a variety of industries from its base of approximately 5,300 Workforce Optimization clients throughout the United States. The overall sampling error of the national survey is +/- 4.8 percent at the 95 percent confidence level.