Small Businesses Less Optimistic About The Economy Pending Election Outcomes, Says Insperity Survey

Small business owners are increasingly concerned about business prospects compared to last quarter, according to the most recent Business Confidence Survey released today by Insperity, Inc. (NYSE: NSP), a leading provider of human resources and business performance solutions for America’s best businesses. Over 30 percent of respondents are now saying they are doing worse than expected compared to what they projected at the beginning of 2012, a 25 percent increase from last quarter; while 69 percent said they are meeting or exceeding their earlier 2012 performance plans, down 6 percent from March. More than 45 percent are now unsure about the timing of an economic rebound compared to 40 percent in the previous quarter.

Insperity also announced compensation metrics from its base of more than 5,700 small and medium-sized Workforce Optimization TM clients. Compared to the 2011 second quarter data, average compensation is up 1.9 percent, and bonuses are up 4.7 percent. Average commissions received by worksite employees reflected an increase of 5.2 percent versus a 2.6 percent increase in the first quarter of 2012. Overtime pay is still low, running 9.3 percent of regular pay, under the 10 percent level that generally indicates a need for additional employees, but up from 8.6 percent in the first quarter of 2012.

In the survey conducted July 17-19, when asked how they are managing the number of company employees, 28 percent said they are adding new positions, down from 38 percent in the prior quarter; 65 percent are maintaining current staffing levels, versus 56 percent in March; and 7 percent are laying off employees, up from 6 percent in the prior quarter.

“Increasing economic uncertainty in the face of the 2012 national election is forcing many owners of small and medium-sized businesses to scale back the somewhat optimistic plans they formulated at the start of this year,” said Paul J. Sarvadi, Insperity’s chairman and chief executive officer. “These businesses can react to economic changes more quickly than larger firms, but they have not seen the positive signs that justify solid business expansion.”

The economy remained the leading short-term concern listed by 74 percent of business owners, up from 68 percent last March; government health care reform jumped from 44 percent to more than 52 percent to take second place; rising health care costs was cited by 46 percent versus 49 percent previously; and controlling overall operating costs dropped to 34 percent from 46 percent. For the longer-term, the top responses were led by more than 67 percent saying they were either very concerned or had elevated concerns about government expansion and its effect on business; and 66 percent designated the federal deficit and the total national debt, as well as potential tax increases, up from 60 percent last quarter. Concerns for the economy rose to 65 from 57 percent in March.

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