Confidence of Small Manufacturing Companies Decreases Drastically from Previous Quarter

The confidence of small manufacturing companies remains consistent with general United States outlook during the second quarter, but has decreased drastically from the previous quarter. The Small Business Research Board (SBRB, Buffalo Grove, IL) Manufacturing Industry Small Business Confidence Index (M-SBCI) decreased to 30 during the second quarter of 2008, a decline of 11.66 points (31.3 percent) from the 43.66 recorded in the first quarter of 2008. Two major indicators were lowered and contributed to the increase in the index, according to the report co-sponsored by International Profit Associates. The poll of owners and managers of manufacturing companies indicated that 48 percent are expecting the economy to worsen over the next 12 months. 41 percent of the same group said they expect revenues to increase during the coming 12 months versus 54 percent who predicted revenue increases during the previous quarter.

In regard to the third major indicator of confidence, hiring expectations, 44 percent of the respondents said they expect hiring to remain as it did in the past year throughout the course of the next 12 months. The second quarter manufacturing industry confidence index of 32 is consistent with the 30 reported for all U.S. small businesses. Meanwhile, the quarterly report said 58 percent of the businesses have reported inflationary pressures. For those businesses adjusting to inflationary pressures, 64 percent have raised prices, 33 percent have increased shipping and handling costs and 26 percent have reduced other operating costs. Survey participants reported renegotiating customer pricing agreements as the fourth-mentioned possibility for offsetting costs.

More than 1,000 small business owners participated in the nationwide poll. The universe of participants is developed from among small businesses across the United States. The SBRB study is a voluntary survey conducted quarterly. The Small Business Research Board ascertains and reports the opinions of small business owners and managers on a wide variety of topics related to their own businesses as well as national and international issues that may impact their operations. The SBRB conducts these studies for the benefit of small business owners and managers. The SBRB also provides opportunities for third parties to gain real time insight into the attitudes of small businesses nationwide through the independently conducted research. More information can be found at www.ipasbrb.com.