US Small Business Confidence Drops 12 Points But Remains Positive
The HSBC Small Business Confidence Monitor has revealed that US small business confidence remained positive at 108, a slight increase from 4Q09 (106) but declined versus 2Q10 (120). Although the US economy is gradually gaining momentum, the US small business economic outlook has retracted over the past six months amid local economic growth concerns.
Eighty 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% from 32% in 2Q10. The HSBC Confidence Monitor also found that few US small businesses plan to undertake any hiring in the next six months, with 76% of those surveyed expecting to keep the number of staff unchanged (versus 74% in 2Q10).
Waning confidence in US economy is in sharp contrast to US small business’ view of global opportunities for growth. The number of US businesses that indicated they will be involved in cross border trade and international activities in two years from now jumped from 11% to 16% – a 45% expected increase. US businesses are likely to encounter potential business partners in emerging markets who are more optimistic about their domestic economies, with 43% of emerging market respondents anticipating an increase in local economic growth and about a third (33%) 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 (EVP) 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.”
Additional findings from the latest HSBC Small Business Confidence Monitor include:
According to Luppi: “Although businesses recognise 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.”