Small Business CEOs in More of a Hiring Mood

Features Reuters

U.S. small business owners are finally in a better hiring mood as they grow more confident about both the economy and their own business prospects, a survey released Wednesday showed.

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For the first time in three years, a majority of chief executive officers polled by small business group Vistage said they planned to add employees in 2011. The quarterly poll of 1,729 CEOs was conducted between Dec. 14 and Dec. 24.

In the previous installment of the poll, conducted in September, just 46 percent of CEOs said they planned to add jobs in the next 12 months.

In the December poll, 58% thought economic conditions had improved from a year earlier, and roughly the same percentage thought things would get better still over the next 12 months.

That was a significant improvement over September's survey, which found just 40% thought economic conditions would improve in the coming year.

More than three-quarters of those surveyed most recently thought their sales would increase in the next 12 months, compared with two-thirds who expected gains in September's poll.

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The latest poll comes two days before the Labor Department releases its December employment report. Economists polled by Reuters expect it to show private companies added a net 145,000 jobs, a marked improvement from November but still far short of what is needed to bring the jobless rate down quickly.

Small businesses typically account for the majority of job growth, but they remained reluctant to hire 18 months into an economic recovery.

According to data from the ADP Employment Report, companies with fewer than 50 employees cut a net 326,000 jobs since the end of the recession in June 2009, although they have stepped up hiring in recent months.

President Barack Obama has pushed a variety of programs aimed at getting these companies to pick up the pace of hiring, but many of the ideas focused on freeing up small-business lending. The Vistage survey showed economic uncertainty was a far bigger worry than financing issues.
When asked to name their most significant business concern, 31% cited economic uncertainty, almost twice the percentage that pointed to financial issues.

The poll also showed small business owners were more inclined to raise prices this year, another sign of growing confidence. Almost 40% said they expected prices for their products or services to increase in the next 12 months, up from 28% in the prior quarter's poll.

Although overall inflation remains very low--below the Federal Reserve's perceived comfort zone--rising commodity prices have begun to squeeze margins at many businesses. With unemployment high, however, companies may struggle to pass along those price increases to budget-conscious consumers.

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