US SMBs Report Low Earnings Due to Weaker Sales

The National Federation of Independent Business released its Index of Small Business Optimism, which gained 2.7 points, rising to 91.7 in October.

The profit trend improved by seven points in October reaching net negative 26%. but still much more percentage of owners complain about decrease in sales quarter after quarter. Of the owners having lower profits compared to the previous three months, 60 percent said it was due to weaker sales, 3 percent cited rising labor costs, 8 percent reported higher materials costs, 3 percent said increase in insurance costs, 8 percent blamed lower selling prices and 5 percent cited higher taxes and regulatory costs.

On a seasonally adjusted basis, the net percent of owners reporting higher nominal sales in the past three months showed an improvement of four points to a net-negative 13 percent. It is 20 points better than in May 2009. 22 percent (unadjusted) of all owners reported higher sales, while 31 percent reported lower sales. Widespread price cutting is found to contribute to lower nominal sales. The net percent of owners rose 1% (gaining 4 points from September) of all owners who are expecting higher real sales. Not seasonally adjusted, the percentage of owners expecting sales to improve in the next three months is 24 percent and 35 percent expect declines.

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