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Capital One Bank Survey for Louisiana shows small business, consumers concerns

Optimized-lafayette louisianaCapital One Bank has released its quarterly Market Pulse survey which presents a somewhat differing outlook between small and large businesses in Louisiana.  It also indicates that Louisiana consumers are becoming more concerned about their own personal futures:

 

 

Here is the surveys findings as per a press release from Capital One Bank: 

Capital One Bank released the results of its quarterly Market Pulse survey gauging the economic outlook of both businesses and consumers in Louisiana. Survey results for the quarter suggest that while large businesses in Louisiana are more optimistic, small businesses are becoming more cautious about market and economic conditions. Nearly a third (32 percent) of Louisiana small businesses believe economic conditions are getting worse, a record high in the last two years and more than double the previous quarter (15 percent). By contrast, only 1-in-10 large businesses believe economic conditions are getting worse. Both large and small business in the state continue to be cautious about spending in the near term, holding steady on investments and holding off on plans to hire in the next six months. The survey also suggests that Louisiana consumers are showing concern about their personal financial situation, the ability to grow personal savings and the availability of jobs.

“Our survey results this quarter suggest that we are seeing a potentially significant difference between the perceptions and financial well-being of large and small businesses in the state,” said Rob Stuart, Louisiana State President, Capital One Bank. “These results aren’t entirely surprising given the mixed economic news and the political uncertainties that we have seen in recent months. On the positive side, hiring and spending plans remain on track, and both large and small businesses report that credit or financing is available for them when appropriate growth opportunities arise.”

 

Overall Business Outlook

        When asked specifically about economic conditions in Louisiana, the large and small businesses are split.

  • Nearly a third (32 percent) of Louisiana small businesses believe economic conditions are getting worse, a record high in the last two years. This finding is more than double the previous quarter (15 percent), and 12 points higher from third quarter 2011 (20 percent).  A quarter of small businesses report conditions are “improving,” down from second quarter 2012 (10 points) and third quarter 2011 (11 points). A third of Louisiana small businesses report they are in a better financial position compared to a year ago. This is a significant 14-point drop from second quarter 2012, and 13 points lower from third quarter 2011. 

 

  • Among large businesses, only 1-in-10 believe economic conditions are getting worse, slightly higher than in second-quarter 2012 (six percent), but down from the 17 percent reported in third quarter 2011. The remaining large businesses are roughly split: 43 percent believe conditions are “improving” while 47 percent believe conditions are “about the same.”

 

 

A closer look at hiring suggests that hiring projections among Louisiana large and small businesses are consistent with last quarter. Additionally, most small businesses in Louisiana plan on decreasing their spending, while large businesses in the state plan to maintain spending at current levels.

  • Nearly one-third (29 percent) of Louisiana small businesses have plans to make additional hires in the next six-months, consistent with second quarter 2012, but six points lower than third quarter 2011. One-third of local large businesses plan on making hires in the short-term, consistent with last quarter and from third quarter 2011.

 

  • Twenty-one percent of small businesses plan to decrease spending over the next six months, a significant 11-point increase from the previous quarter and three points higher than third quarter 2011. Among small businesses, 63 percent plan to keep spending constant, which is a significant drop of 12 points from last quarter, but still eight points higher from a year ago. For large businesses, 80 percent plan to keep spending the same, which is consistent with second quarter 2012, and is significantly higher than the 59 percent reported in third quarter 2011. 

                                                                                                                                                                                                                                 

 

Small Business Focus

        The Capital One Small Business Barometer, a national survey conducted every quarter that includes 300 small businesses in the Louisiana area, examines general indicators of the business environment. This quarter’s (third quarter 2012) survey results suggest that Louisiana small businesses are less optimistic than the rest of the country.  Only a quarter of Louisiana small businesses believe conditions are improving, compared to the national average of 29 percent. Similarly, 32 percent of Louisiana small businesses believe conditions are “getting worse,” also greater than the national average (24 percent). Economic conditions for small business are also worse than national trends; 21 percent of Louisiana small businesses believe economic conditions in the U.S. will be better six months from now compared to the national average (23 percent).  However, plans to hire additional employees in the next six months among Louisiana small businesses are slightly higher than the national average (29% vs. 27%).

        The national business outlook is a measure of business prospects over the next six months on a scale of significantly worse (1) to significantly better (10).  For third quarter 2012, the outlook for Louisiana small businesses sits at 5.8, significantly lower than the 6.4 reported in second quarter 2012. The largest drivers of these business challenges include cash flow (6.1), fuel prices (6.0), price margins (5.9) and timing of customer payments (5.7). Between this quarter (third quarter 2012) and last quarter (second quarter 2012), a decrease in timing of customer payments (-0.4) significantly affected the overall business outlook (5.8).

        “While the majority of Louisiana small businesses are telling us that their business either doing better or is holding steady, the shift we’ve seen for some small business in the third quarter was pretty dramatic and something that we should watch closely going forward to determine whether this is a trend or a short-term challenge,” said Stuart.

 

Consumers Face Challenges

        In the third quarter of 2012, Louisiana consumers suggest that the Louisiana job market remains stagnant, with most consumers reporting a negative outlook on the availability of local jobs as well as significant challenges with diminishing personal savings.

  • Thirty-seven percent of Louisiana consumers report that jobs are “hard to find,” which is up eight points from last quarter. These results are roughly consistent with third quarter 2011. Ten percent say jobs are “nearly impossible to find,” following results from last quarter but down significantly from 18 percent last year (third quarter 2011).

 

  • Forty percent of consumers say their savings decreased, up nine points from last quarter, but nine points lower than the two-year high set in third quarter 2011. Of these consumers, a quarter reported their savings “decreased significantly,” tying the two-year record set in fourth quarter 2010. This finding is more than double that reported in the previous quarter (11 percent) and is four points higher than a year ago. About a third (36 percent) of consumers report their personal financial situation “stayed the same,” down eight points from second quarter 2012, but consistent with third quarter 2011

 

        Local business conditions continue to be viewed unfavorably by Louisiana consumers, with incremental improvements from the second quarter.

  • Nearly three-fifths (58 percent) of Louisiana consumers feel current business conditions are “only fair” or “poor.” This represents a three-point increase from the previous quarter (second-quarter 2012), but a six-point decrease from third quarter 2011. Of these consumers, 21 percent think conditions are “poor,” a significant increase of 10 points from second quarter 2012 and two points higher than third quarter 2011. Although fewer consumers report conditions are “excellent” or “good” (39 percent) compared to second quarter 2012 (44 percent), it is still higher than compared to second quarter 2011 (33 percent).

 

 

 

              

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