Union Bank Small Business Survey Finds Concern about Economy
04 March 2008 - 3:00AM
Business Wire
A survey released today by Union Bank of California, N.A., shows
that small business owners have grown increasingly cautious as the
economic climate has become more uncertain. That caution is
impacting respondents� profit outlooks for the year as well as
spending and hiring plans. California�s economy was the No. 1
challenge facing small business owners surveyed in January,
replacing workers� compensation costs, which held the top spot
since 2004. The bank�s annual survey, which has been tracking
trends among small business owners for the past eight years, found
52 percent of respondents statewide believe 2008 will be more
profitable than 2007, a 15 percentage-point decline from last
year�s results. Half (51 percent) of the respondents reported
greater sales in 2007, a 12 percentage-point drop from the previous
year. Respondents are showing caution with capital expenditures as
the economy slows. Only 26 percent plan to increase spending on
equipment and building improvements in 2008, while the majority (62
percent) plan to spend the same amount. Another area where the
majority of respondents plan to keep expenses the same: staffing
levels. Seventy-one percent expect to maintain their staffing
levels in 2008. Only 23 percent plan to add positions this year, a
7 percentage-point decline versus 2007. In 2006, 36 percent of
respondents expected to add staff. While most small business owners
surveyed are not expecting to hire new employees, the majority is
not planning layoffs, either. Ninety five percent of respondents
said they do not anticipate layoffs in 2008. However, 10 percent of
those surveyed in January said they were forced to layoff employees
for economic reasons last year. �This annual survey is an excellent
barometer of issues facing small business owners,� said Union Bank
of California�s President and Chief Executive Officer Masa Tanaka.
�While the group surveyed has become increasingly concerned about
California�s economy, a majority still expects an increase in
profits in 2008. That�s good news for California as a whole because
small business is a powerful driver of the economy.� The subprime
mortgage crisis does not appear to be having a widespread impact
across the state. Approximately 50 percent of respondents said they
have seen no impact from rising foreclosures. However, for those
respondents who have noticed a dip in business, the biggest impact
has been felt in Riverside and San Bernardino counties. In
Riverside, 39 percent of respondents said customers are spending
more conservatively. In San Bernardino, 45 percent have seen
customers spending less. That compares to 35 percent statewide.
Those figures mirror recent foreclosure data released by real
estate tracking firm RealtyTrac that shows the Riverside-San
Bernardino metro area had the fourth highest foreclosure rate among
the country�s largest 100 metro areas in 2007. While the California
economy has become the No. 1 challenge of nearly 50 percent of
respondents, up 15 percentage points from 2007, worry about rapidly
increasing workers� compensation costs has declined. Thirty three
percent of respondents surveyed are concerned about workers
compensation costs, down from 43 percent in 2007. Small business
owners surveyed ranked state and local business taxes as the third
biggest challenge (26 percent). The workers� compensation crisis
appears to have decreased as a major issue on several fronts. In
addition to moving down on the list of challenges facing small
business owners, only 19 percent of respondents said workers
compensation insurance costs increased in 2008 compared to 20
percent in 2007. The majority � 65 percent � said their insurance
premium remained the same, while 16 percent said costs declined.
For the third year in a row, a majority (55 percent) of business
owners indicated that they do not offer healthcare coverage to
employees, up from 52 percent in 2007. Santa Clara County continued
to buck the trend, with 73 percent of its small business employers
offering healthcare benefits. For those employers that offer
healthcare benefits, 40 percent said rising healthcare costs have
not impacted their business, while 24 percent said they have
shifted a larger portion of healthcare costs to employees or
reduced health benefits. Retirement benefits and 401(k) plans are
scarce among small business owners surveyed. Only 17 percent offer
401(k) plans and 12 percent offer retirement benefits. The most
common benefit offered is vacation pay (62 percent). In spite of
the cautious outlook for 2008, respondents believe opportunities
for growth continue to be the No. 1 advantage of doing business in
California (28 percent). Family ties ranked No. 2 (22 percent) and
climate No. 3 (17 percent). Like many in the country, the small
business owners surveyed are monitoring the presidential election.
Forty-eight percent said they are paying closer attention to this
year�s presidential race compared to previous years. Survey
Methodology The Union Bank of California annual Small Business
Survey was conducted through individual interviews of nearly 2,000
small business owners from Jan. 7, 2008 to Jan. 18, 2008 throughout
California. For purposes of the survey, Union Bank defined small
businesses as businesses with annual revenue of $15 million or
below.
Unionbancal (NYSE:UB)
Historical Stock Chart
From Jun 2024 to Jul 2024
Unionbancal (NYSE:UB)
Historical Stock Chart
From Jul 2023 to Jul 2024
Real-Time news about Unionbancal Corp (New York Stock Exchange): 0 recent articles
More Union Bank of California, N.A. News Articles