Small business owners' confidence increased for the second straight month in May, rising to its highest level in seven months, according to a new survey.
The Discover Small Business Watch index rose to 87.4 from 85.1 in April, driven in part by more small business owners believing the economy is improving.
"This boost could be significant because we were polling following the week in which the Greek banking crisis reverberated through Europe, the gulf oil spill intensified and the Dow Jones plunged below 10,000," said Ryan Scully, director of Discover's business credit card, in a statement. "By their responses, small business owners are seeing improvement in the economy in spite of bad news."
In May, 35 percent of small businesses surveyed said they believe the economy is getting better, up from 31 percent in April; 51 percent say the economy is getting worse, down a point from the previous month; and 12 percent see the economy as the same, down from 14 percent in April.
The percentage of small business owners rating the current economy as good or excellent was 12 percent in May, compared to 13 percent in April. The April and May ratings on the current state of the economy are the highest since June 2008. Thirty-two percent rate the economy as fair in May, while 56 percent still think it's poor.
Small businesses reporting cash flow issues held steady at 45 percent, the lowest number in seven months. Forty-eight percent reported no cash flow issues, and 7 percent were unsure.
Twenty-eight percent of small business owners say economic conditions for their businesses are getting better, down from 30 percent in April; 44 percent said conditions are getting worse in May, down from 48 percent in April; and 24 percent said things are staying the same, up from 19 percent in April.
Twenty-five percent of small business owners indicated they were increasing business spending in May, up from 23 percent in April, while 46 percent said they were reducing spending this month, compared with 43 percent in April, and 31 percent said they are spending the same, up from 25 percent in May.
Although the recession forced more than half of small business owners to postpone or cancel their vacations during the past two years, a few more are considering some time off this year: 51 percent of small business owners said in May that the economy forced them to cancel or postpone vacations or time off, down from 58 percent last year, while 40 percent they had not changed plans because of the economy, up from 38 percent last year.
Small business owners also appear to have cut back on the amount of time they spend on the job: 56 percent of small business owners reported in May that they work six or more days a week, down from 61 percent last year. Prior to the recession, 45 percent of business owners said they worked six- and seven-day work weeks.
Fifty-five percent of small business owners say it has been two or more years since their last week-long vacation.
Non-self-employed people aren't as affected by the economy when it comes to the recession: 44 percent of them reported they will delay or cancel a vacation this year, compared with small business owners at 51 percent.
For small business owners who are postponing or canceling vacations due to the economy, 78 percent indicated they are doing so to save money or pay business-related bills.
Small business owners continue to work longer hours per day than they did pre-recession. This year, 38 percent reported working 10 or more hours per day, compared to employees, which is statistically steady with 2009, when 39 percent reported doing so. These numbers are significantly higher than in 2008, when only 30 percent reported doing so. Only 19 percent of the general population in 2010 reported working ten or more hours per day.
Small business owners are still working through the holidays far more than most people. This year, 55 percent say they will work through most, if not all, holidays, slightly down from 57 percent in 2009, but higher than the 47 percent that reported doing so in 2008. The number still outpaces non-self-employed people significantly, with only 27 percent of them saying this year that they will work through most or all holidays.
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