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The Business Narrative: Small Business Uncertainty

Jun 12, 2024 11:24AM ● By Donna Walker

Small Business Uncertainty Index Reaches Highest Level Since 2020  

The national NFIB Small Business Optimism Index reached the highest reading of the year in May at 90.5, a 0.8-point increase but still the 29th month below the historical average of 98.  

 

The Uncertainty Index rose nine points to 85, the highest reading since November 2020. Twenty-two percent of owners reported that inflation was their single most important problem in operating their business, unchanged from April and the top business problem among owners. 

 

“The small business sector is responsible for the production of over 40 percent of GDP and employment, a crucial portion of the economy,” said NFIB Chief Economist Bill Dunkelberg.

 

Dunkelberg added, “But for 29 consecutive months, small business owners have expressed historically low optimism and their views about future business conditions are at the worst levels seen in 50 years. Small business owners need relief as inflation has not eased much on Main Street.” 

 

State-specific data is unavailable, but NFIB State Director Ben Homeyer said, “South Carolina’s small businesses need predictability, but there’s still too much uncertainty regarding the direction of the economy. Inflation is still driving up the cost of owning and operating a small business and putting the brakes on people’s spending.” 

 

Key findings of the national survey include: 

 

A net negative 8 percent (seasonally adjusted) of owners viewed current inventory stocks as “too low” in May, down four points from April and the lowest reading since October 1981.  

 

Owners’ plans to hire rose three points in May to a seasonally adjusted net 15 percent, the highest reading of the year. 

 

Seasonally adjusted, a net 28 percent plan price hikes in May, up two points from April. 

 

Six percent of owners reported that financing was their top business problem in May, up two points from April. The last time financing as a top business problem was this high was in June 2010. 

 

As reported in NFIB’s monthly jobs report, a seasonally adjusted net 18 percent plan to raise compensation in the next three months, down three points from April and the lowest reading since March 2021.

 

Forty-two percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period.  

 

Fifty-eight percent of owners reported capital outlays in the last six months, up two points from April. Of those making expenditures, 40 percent reported spending on new equipment, 25 percent acquired vehicles, and 16 percent improved or expanded facilities.

 

Eleven percent spent money on new fixtures and furniture and 6 percent acquired new buildings or land for expansion. Twenty-three percent (seasonally adjusted) plan capital outlays in the next six months, up one point from April.

 

A net negative 14 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months. A net percent of owners expecting higher real sales volumes fell one point to a net negative 13 percent (seasonally adjusted). 

 

The net percent of owners reporting inventory gains fell one point to a net negative 7 percent. Not seasonally adjusted, 11 percent reported increases in stocks and 15 percent reported reductions.  

 

A net negative 8 percent (seasonally adjusted) of owners viewed current inventory stocks as “too low” in May, the lowest reading since October 1981. A net negative 6 percent (seasonally adjusted) of owners plan inventory investment in the coming months, unchanged from April. 

 

The net percent of owners raising average selling prices was unchanged from April at a net 25 percent seasonally adjusted. Twenty-two percent of owners reported that inflation was their single most important problem in operating their business.

 

Unadjusted, 12 percent reported lower average selling prices and 40 percent reported higher average prices.  

 

Price hikes were the most frequent in the retail (55 percent higher, 6 percent lower), finance (50 percent higher, 3 percent lower), construction (42 percent higher, 9 percent lower), manufacturing (42 percent higher, 12 percent lower), and services (37 percent higher, 6 percent lower) sectors. Seasonally adjusted, a net 28 percent plan price hikes in May. 

 

Seasonally adjusted, a net 37 percent reported raising compensation, down one point from April.

 

A seasonally adjusted 18 percent plan to raise compensation in the next three months, down three points from April and the lowest reading since March 2021.

 

Ten percent of owners cited labor costs as their top business problem, only three points below the highest reading of 13 percent reached in December 2021. Twenty percent said that labor quality was their top business problem, just behind inflation as the number one issue. 

 

The frequency of reports of positive profit trends was a net negative 30 percent (seasonally adjusted), three points worse than April and a very poor reading.

 

Among owners reporting lower profits, 32 percent blamed weaker sales, 15 percent blamed the rise in the cost of materials, 14 percent cited labor costs, and 11 percent cited lower selling prices.

 

For owners reporting higher profits, 41 percent credited sales volumes, 23 percent cited usual seasonal change, and 10 percent cited higher selling prices. 

 

Three percent of owners reported that all their borrowing needs were not satisfied.

 

Twenty-nine percent reported all credit needs met and 58 percent said they were not interested in a loan. A net 6 percent reported their last loan was harder to get than in previous attempts. 

 

Six percent of owners reported that financing was their top business problem in May, up two points from April. The last time financing as a top business problem was this high was in June 2010. 

 

The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986.

 

Survey respondents are randomly drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in May 2024.  

City of Greenville Breaks Ground on 10-Story Honor Tower, Gardens at Unity Park

Dozens of private donors contributing a total of $5.5 million joined the city of Greenville on June 11, 2024, in breaking ground on the 10-story Thomas and Vivian A. Wong Honor Tower and Gardens at Unity Park.

 

The tower will pay tribute to military veterans and first responders – law enforcement officers, firefighters, medical workers, mental health workers and utility linemen who save lives and make the community a better place to live.

 

The $11 million cost is split evenly between city accommodation tax revenue and private contributions from 24 donors.

 

Construction on the tower designed by Paul Endres of Endrestudio of California is scheduled to be completed in Q3 of 2025.

 

The Philip J. Carlton Plaza will host public ceremonies and memorials, and the Prisma Health Observation Deck will provide a panoramic view of Greenville’s skyline and the Blue Ridge Mountains.

 

The Wong Family donated $1 million for the tower. Sharon and Heather Carlton donated $500,000 in honor of Sharon’s late-husband and Heather’s father, Philip J. Carleton. Prisma Health contributed to the observation deck, and AT&T contributed for the upper plaza.

 

The Honor Tower will be surrounded at the base by gardens offering a place for quiet reflection and contemplation.

 

The Webster Family donated for the Lanny Webster Garden, the McKissick Foundation donated for the Noel P. McKissick Garden, the Surendra Family donated for the Ahimsa Garden of Peace honoring Surendra and Neelima Jain and the McCrary Family donated for the Grand Garden of Hope honoring Jan McCrary.

 

Emilie and John Pazdan donated for the flagpole, pedestal and U.S. flag that will fly at the tower.

 

Other donors were Nancy and Rick Pennell, Donna and Bo Gossett, the Aughtry Family Foundation, Harper Corporation, Southern Tide, the Estevez Family, the Todd Taylor Family, Jordon Construction, Lee & Associates, Proactive MD, the Yeargin Family, VisitGreenvilleSC, Greenville County and the Andre Bauer Family.

 

Visitors can ascend to the top of the tower by way of stairs or a glass-walled elevator. The structure includes 75,000 pounds of steel.

 

Located between what were once two segregated parks, Honor Tower is both an expression of tribute and symbolic of a city that has built a reputation for collegiality, collaboration, respect and unity, officials said.

Sonoco Implementing Increase for Uncoated Recycled Paperboard in U.S., Canada

Hartsville, South Carolina-based Sonoco (NYSE: SON) said it is implementing a $70 per ton price increase for all grades of uncoated recycled paperboard (URB) in the United States and Canada, effective with shipments beginning July 10, 2024.  

 

Officials with the packaging manufacturer said the action is necessary to offset increased input costs.

 

With net sales of approximately $6.8 billion in 2023, Sonoco has approximately 22,000 employees working in more than 300 operations around the world, serving some of the world’s best-known brands.

College of Charleston Approves Tuition Rate for 2024-2025 Academic Year

The College of Charleston Board of Trustees voted June 10, 2024, to hold tuition constant for South Carolina students for the fifth consecutive year.

 

The board also voted to slightly increase tuition for out-of-state students by 3.95 percent for the 2024-2025 academic year.   

 

Beginning fall semester 2024, full-time undergraduate students from South Carolina will pay $ 6,259 per semester.

 

Out-of-state, full-time undergraduate students will pay $18,918 per semester. Graduate students’ tuition will be based on a new program-dependent, two-tiered system.  

 

“The College of Charleston prioritizes keeping tuition rates affordable for all students,” says board chair Renee Romberger. “I am pleased that we, with the help of the S.C. General Assembly, were able to hold tuition steady for South Carolina students and to only modestly increase costs for our non-resident students.”  

 

“This action helps continue our academic mission to provide a high-quality education at an affordable cost,” says College of Charleston President Andrew T. Hsu. “Because of the continued investment by the South Carolina Legislature, we have been able to keep tuition flat for our in-state students for a fifth year in a row."

 

Hsu added, "In comparison to our peers, the College of Charleston continues to be one of the best value propositions in the higher-education marketplace.”  

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