Confidence of US small businesses ebbs on 'fiscal cliff' -survey

Wed Oct 3, 2012 4:07pm EDT

Related Topics

* CEO confidence index at its lowest level in one year

* After a dull 2012, CEO see more of the same for 2013

* Uncertainty seen as the main hurdle

By Atossa Araxia Abrahamian

Oct 3 (Reuters) - Executives of U.S. small businesses have less confidence in the 2013 economic outlook than they did three months ago, weighed by uncertainty over the November elections and the so-called fiscal cliff, a new survey showed on Wednesday.

Vistage International, a business advisory firm, said its Vistage Confidence Index dropped to 89.0 for the July to September period, down from 92.8 during the second quarter and 105.1 in the first quarter.

The index, which stood 83.5 in the third quarter of 2011, shows the fears of the "fiscal cliff," the across-the-board spending cuts and tax raises set to take effect in the new year if Washington does not take action.

Just over half of the 1,504 CEOs surveyed said they are taking the threat of the fiscal cliff "very seriously," with another 593 taking it "somewhat seriously," Vistage said.

And 57 percent of the respondents said an expiration of the Bush-era tax cuts for those making over $250,000 per year would affect them and their business.

Over four-fifths of the executives said the $16 trillion debt burden the U.S. carries is affecting their business growth.

MORE OF THE SAME FOR 2013

Half of the CEOs said economic conditions are largely unchanged since a year ago, and 45 percent expect next year to be about the same. Still, half the executives said they expected to hire new employees over the next 12 months. Only 9 percent anticipated layoffs, and two-thirds saw a likely increase in their firms' revenues.

CEOs said economic uncertainty is the most significant business issue, with 30 percent saying it was a major concern. Another 17 percent pointed to political uncertainty, and 17 percent more said that hiring, training, and retraining staff was their biggest burden.

Politics and the overall economy overshadowed the importance of credit for the executives. Only 6 percent of those surveyed said paying or accessing credit was the biggest challenge to their business.

Most firms did not expect to increase prices, and retaining and attracting new customers was the day-to-day challenge reported by the most executives.

The survey included responses from chief executives at 1,504 small and medium-sized businesses and has a margin of error of 1.6 percentage points.

Thomson Reuters is a shareholder in Vistage.

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