Wednesday, 6 April 2011

Japan, oil worry small US firms — survey


Japan, oil worry small US firms — survey

Survey in US shows rising oil prices and Japan’s crises have sunk optimism among CEO’s of small businesses in the US.
Published: 2011/04/06 06:43:14 AM

RISING oil prices and Japan’s crisis have dented confidence among CEOs at small US businesses, a survey published yesterday showed.

Half of the CEOs felt the US economy would improve in the first quarter, a drop from 59% at the end of last year, according to Vistage, which represents small business CEOs.

Vistage conducted the survey.

The share who said they planned to hire more staff was 54%, unchanged from the last quarter of last year, although that was the highest level in the past four years, Vistage said.

"It has stalled because there is a new level of uncertainty. That is not surprising, given the events in Japan and the Middle East," said Vistage International CEO Rafael Pastor.

The Vistage survey’s overall confidence index fell to 105,2 in the first quarter, down from 106,3 at the end of last year but up from about 94 a year earlier. Two-thirds of CEOs said the economy had improved over the past year.

In a potentially worrying sign for the US Federal Reserve, 49% of the CEOs said they expected to raise their prices during the next 12 months, a jump from 39% in the fourth quarter.

Furthermore, 36% said the US central bank’s policies gave them less confidence in the economy, while only 10% said they were boosting their confidence.

The Fed is holding interest rates near zero and has pumped about $2- trillion into the US economy to bolster its recovery from the worst recession since the Great Depression of the 1930s.

Critics say the central bank risks triggering high inflation.

Nearly three quarters of the CEOs in the survey said rising petrol prices would have an adverse effect on their businesses, and 38% said they saw signs that higher fuel costs were cutting into consumer spending, while 44% saw no effect from petrol prices on spending.

Even so, four out of five CEOs taking part said they did not plan to put business plans on hold because of higher fuel costs and the uncertainty in the Middle East.

Small businesses are the backbone of the US economy, accounting for about half of gross domestic product and three quarters of jobs, according to estimates.

The nationwide survey was conducted between March 15 and 25 and included responses from 1728 CEOs. The margin of error was 1,6 percentage points. Reuters

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