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Small business confidence ebbs as sales remain flat.

CPAs with small business clients will find them in a pessimistic mood, according to the latest National Federation of Independent Business quarterly survey of 2,200 small business owners conducted in late July.

The NFIB's small business optimism index dropped more than two points to 100.0 in July, down from 102.2 in April when a hoped for recovery had boosted expectations. Sluggish sales were the principal reason for the renewed pessimism. Of the small business owners polled, 17% named poor sales as their most pressing problem--only two percentage points above the recession lows made in January 1991.

As might be expected, prices were stable during the period, with little evidence of an imminent rise in inflationary pressures. Only 17% of the companies polled raised prices during the second quarter, down from 20% in the first quarter, while 14% lowered them, compared with 15% in the first three months of 1992. Only 16% of the companies surveyed planned to raise prices in the third quarter of 1992, down from 19% in the April poll and a new low in the survey's history. A miniscule 3% planned to lower prices, down from 4% in the previous quarter.

Inventory levels remain stable. During the second quarter of 1992, 19% of the companies polled decreased inventories, while 16% added to them. In the third quarter, 14% planned to add to inventories, compared with 18% in the previous poll, while another 14% planned inventory reductions, up from 11% in the first quarter.
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Nov 1, 1992
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