Small business owners as a group are now the most pessimistic they have been since the third quarter of 2010, according to the latest Wells Fargo (NYSE: WFC)/Gallup Small Business Index.
According to the California-based bank, the index fell 28 points to negative 11 in the post-election survey conducted Nov. 12-16, 2012. Key drivers of this decline include business owner concerns about their future financial situation, cash flow, capital spending, and hiring over the next 12 months.
Wells Fargo, together with US polling firm Gallup, said they survey small business owners quarterly across the nation to gauge their perceptions of their present situation (past 12 months) and future expectations (next 12 months) in six key areas: financial situation, cash flow, revenues, capital spending allocation, hiring, and credit availability.
Likely related to owners’ pessimism, one in five small business owners (21% ) expects to decrease the number of jobs at their company over the next 12 months the largest % age of small businesses expecting to reduce jobs since the inception of theWells Fargo/Gallup Small Business Index in 2003.
One in four owners (26%) reported a reduction in the number of jobs at their company over the past 12 months, representing the largest % age since the fourth quarter of 2010.
Despite improvements in consumer spending over the past few months, 44% of business owners said their revenues have decreased a little or a lot in the past 12 months, up from 38% in July. Looking ahead 12 months, 29% of business owners expect lower revenues, up 11 points from the prior reading and the highest percentage of small businesses expecting decreasing revenues since Q2 2009.
One in three (34%) small business owners expects to decrease their capital spending in the next 12 months. This is up from 24% in July and the highest number of owners expecting to lower their future capital spending since the third quarter of 2010. A larger percentage of business owners (40%) reported decreased capital spending over the past 12 months.
The number of business owners expecting to be in a “poor” financial position over the next 12 months increased to 28% in November while the percentage expecting “poor” cash flow increased to 30% both at their highest level since the Index began in 2003.
Statistically significant changes were seen in five of the six survey components Jobs, Revenues, Capital Spending, Financial Situation, and Cash flow. Ease of Obtaining Credit did not have statistically meaningful changes this quarter.