Survey: One in five plan to add jobs in first half of 2011.
The HSBC Small Business Confidence Monitor today revealed that U.S. small business confidence remained positive at 108, a slight increase from 4Q2009 (106) but declined versus 2Q2010 (120). Although the U.S. economy is gradually gaining momentum, the U.S. small business economic outlook has retracted over the past six months amid local economic growth concerns. 80 percent of small businesses expect the economy to remain the same or increase in the next six months. The number of respondents expecting the local economy to grow dropped to 14 percent from 32 percent in 2Q2010. The HSBC Confidence Monitor also found that few U.S. small businesses plan to undertake any hiring in the next six months, with 76 percent of those surveyed expecting to keep the number of staff unchanged (versus 74 percent in 2Q2010).
Waning confidence in U.S. economy is in sharp contrast to U.S. small business’ view of global opportunities for growth. The number of U.S. businesses that indicated they will be involved in cross border trade and international activities in two years from now jumped from 11 percent to 16 percent - a 45 percent expected increase. U.S. businesses are likely to encounter potential business partners in emerging markets who are more optimistic about their domestic economies with 43 percent of emerging market respondents anticipating an increase in local economic growth and about a third (33 percent) planning to hire in the first half of 2011.
“We have seen an increase in small businesses expressing interest in expanding their business overseas,” said Mark Luppi, Executive Vice President and Head of Business Banking for HSBC North America. “While many businesses postponed their growth plans during the market downturn, they are beginning to demonstrate greater interest in growth opportunities offered in overseas markets. The HSBC survey can help businesses identify markets that anticipate the strongest level of economic growth and target potential business opportunities.”
The bi-annual HSBC Small Business Confidence Monitor measures small businesses’ six month outlook on local economic growth, capital investment plans and recruitment drives. The largest international survey of its kind, the monitor covers more than 6,300 small and medium enterprises (SMEs) in 21 markets throughout Asia, the Middle East, Europe, North America and Latin America.
Additional U.S. findings from the latest HSBC Small Business Confidence Monitor include:
- Small business’ top three priorities in 2011: (1) Staying the course (no change in strategy), (2) entering new markets, and (3) attracting and retaining talent.
- Thirty-two percent of U.S. small businesses anticipate an increase in capital expenditure plans over the next six months versus 33 percent in 2Q2010.
- U.S. SMEs cited an increased demand for services and products, opportunities in new markets, and economic stimulus funds and grants as the main factors that would encourage them to increase capital expenditures or hiring.
- The top barriers cited by U.S. businesses include:
- Lack of demand for goods and services in overseas markets
- Lack of knowledge (e.g. taxation, regulations), contacts and experience of overseas markets
- Local regulations and legal complexities (ranked second in 2Q2010)
- According to Luppi, “Although businesses recognize the challenges of doing businesses overseas, they also understand such activities can substantially increase annual revenues and diversify profit streams versus competitors that may remain domestically focused. We are, therefore, prepared to assist our clients with understanding the local regulations, managing foreign exchange risk and providing the local knowledge they need to start or continue their journey in other markets.”