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Small businesses see quick end to recession.

Predicting flatly that "the recession will be over by the end of this quarter," John Sloan, president of the National Federation of Independent Business (NFIB), reported the results of its April quarterly survey of 2,000 small companies across the country.

The NFIB'S small business optimism index rebounded nearly 10 points from a depressed 92.6 to 101.8, its highest level in more than a year. Sloan remarked, "Small businesses will be hiring and stocking their shelves to handle better times." The only dark spot was first quarter sales declines, the worst in the survey's history. Of the companies surveyed, 41% had lower sales volume in the first quarter, while only 32% posted sales gains.

Slightly more small businesses (37%) borrowed regularly in the first quarter, up three percentage points from the record low set in the final quarter of 1990. Average interest rates paid by small companies fell 70 basis points to 11.2%, with half of all short-term loans tied to the prime rate.

Only 21% of the small companies surveyed plan to raise prices, the lowest percentage since 1987. Companies that actually lowered prices during the first quarter rose to 16%, two percentage points higher than the January survey.

The small business employment outlook brightened perceptibly. Companies intending to increase employment in the next three to six months rose sharply by nine percentage points to 22% of those surveyed. Only 6% of those surveyed plan layoffs, down from 10% in the previous survey.

The more optimistic attitude was also apparent in a move to restock lean inventories. Of the companies surveyed 19% lan to increase inventories, while only 12% expect to lower inventory levels. William Dunkelberg, NFIB chief economist, labeled this a very aggressive inventory picture.
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Publication:Journal of Accountancy
Date:Jul 1, 1991
Words:290
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