Construction, Contracting Business Owners Report First Decline in Confidence After Three Consecutive Quarterly Gains

Small Business Research Board study indicates construction, contracting industry to decrease hiring next 12 months. 

NORTHFIELD, IL (October 12, 2007) –  Owners of construction and contracting businesses expressed concern about their business prospects during the next 12 months as the Small Business Research Board (SBRB) said that its Small Business Confidence Index (SBCI) fell during the third quarter for the first time since last year.

The construction and contracting industry reported an SBCI of 47 during the third quarter, a one point decline from the 48 recorded during the second quarter according to the study co-sponsored by IPA.  

The second quarter 2007 SBCI of 48 was slightly more than one point shy of the indicator’s historical high of 49.3 recorded during the second quarter of 2006, the first time the SBRB issued such an industry indicator.   The index plunged to 30.7 during the third quarter of last year before rebounding to 42.04 during the final quarter.  The SBCI then rose again to 43.4 during the first quarter 2007 and was followed by the 48 during the second quarter.

The current industry SBCI is four points higher than the SBCI of 43 reported for all U.S. small businesses during the third quarter.  

The lower construction and contracting SBCI resulted from heightened concern about growth in the economy the next 12 months and plans by 46% (a decrease of four points) of the respondents to reduce hiring during the same period. 

Respondents said they were prepared to decrease staff despite 54% of the participants, two points more than the prior quarter, reporting they expect to attain higher revenues. 

“Small construction and contracting firms are feeling the realities of the marketplace and thus feeling less confident about chances for a turnaround in the economy the next 12 months.” said Gregg M. Steinberg, President of International Profit Associates.   “However, it is appears most are taking actions to manage labor costs during this time so as to minimize the downside risk.”

More than 800 small business owners participated in the nationwide poll.   The universe of participants is developed from among small businesses across the United States.   The SBRB study is a voluntary survey conducted quarterly.. 

The Small Business Research Board ascertains and reports the opinions of small business owners and managers on a wide variety of topics related to their own businesses as well as national and international issues that may impact their operations.   The SBRB conducts these studies for the benefit of small business owners and managers.   The SBRB also provides opportunities for third parties to gain real time insight into the attitudes of small businesses nationwide through the independently conducted research. 

The latest information about the Small Business Research Board can be found at www.ipasbrb.net.

IPA is the largest privately-held provider of management consulting services to small and medium-size businesses in North America.    IPA and its more than 1,800 professionals offer a wide range of proven and innovative methodologies to help businesses grow and prosper regardless of the economic cycle.  IPA either provides directly or through its affiliated companies a comprehensive array of business advisory services, tax and estate planning services or merger, acquisition and other financial advisory services in the United States and Canada. More information about IPA can be found at www.ipa-c.com. 

*  numbers may not equal 100% as a result of rounding