Weak sales is still the most frequently cited top business problem, said an NFIB news release. However, price-cutting is fading, and inventory-adjustments to match lower consumer spending appear to be reaching a conclusion.
"Manufacturing and exporting are leading the recoveryindustries and activities that are not labor intensivewhile construction, an industry historically dominated by small firms, remains depressed," said Bill Dunkelberg, NFIB chief economist. "While the economy is moving forward, albeit at a snail’s pace, it is not nearly fast enough to dramatically improve the unemployment situation, which continues to languish," he added.
The Index is comprised of six components: employment, capital spending and outlook, sales and inventories, inflation, earnings, and credit.
Employment Job creation turned negative in December and deteriorated further in January.
Capital Spending and Outlook The frequency of capital outlays over the past six months rose 4% to 51% of all firms, an increase but historically low. "Owners remain in ‘maintenance mode,’ apparently unwilling to risk new capital investments or not seeing need for them," said the survey report.
Sales and Inventories The net percent of owners reporting higher nominal sales increased 5% to a net negative 11%. This is 23 points better than in the March 2009 depths of the recession, but indicative of weak customer activity, according to NFIB. Some 27% of owners say weak sales continues to be their top business problem.
Inflation The downward pressure on prices appears to be easing. However, January is the 26th consecutive month that more owners reported cutting average selling prices than raising them.
Earnings Reports of positive earnings trends improved in January to a net negative 28%, meaning many more owners report deteriorating earnings than those reporting earnings gains.
Credit Overall, 92% of survey respondents said their credit needs were met or they were not interested in borrowing.