Higher energy costs have negative impact on small business owners
Fueled by a sense that rising energy prices might trip up economic growth, small business owners became less optimistic in March, said analysts with IHS Global Insight
Latest NewsState of Logistics 2016: Pursue mutual benefit RM2 and Jabil collaborate on NA production of pallets Global demand for materials handling equipment to reach $176 billion by 2020 ISA and the Automation Federation draw attention to the growing need for skilled manufacturing work Good news for West Coast ports More News
Latest ResourceGaining Efficiencies Through End-to-end Warehouse Automation Warehouse and distribution center managers in B2B and B2C have never been under more pressure to scale up their operations to meet customer demands in the new, digital economy.
Fueled by a sense that rising energy prices might trip up economic growth, small business owners became less optimistic in March, said analysts with IHS Global Insight.
This comes on the heels of six consecutive months of improvements in small business optimism. ??Furthermore, respondents expecting the economy to be worse in six months outweighed those expecting a better economy. Small business optimism is now standing at its lowest level since November.??After six consecutive months of improved outlook of future revenue, small business owners became less optimistic that sales will increase in the next three months. This is very problematic in light of increased fuel costs.
In an interview with Supply Chain Management Review – LM’s sister publication – economist Leslie Levesque said that retailer’s inventories are not likely to increase.
“Retailers have been keeping their stock at appropriate levels,” she said.??The higher fuel cost appears to have already trickled down, placing pressure on small businesses in charging more for their goods and services, however. The net percent of small business owners planning to raise prices in the next three months jumped to 6 percent, its highest reading since September.”??
“With a more lackluster outlook on inflation, sales and overall business conditions, it is no wonder employment expectations weakened,” said Levesque. “The drop in net respondents planning to hire brought the reading to its lowest point in almost a year. This is consistent with last Friday’s disappointing employment report.”??According to IHS, this is not a good report.
“The hit to small business optimism was expected and any relief in the near term will be limited as they try to cope with rising fuel costs. Small businesses expect lower sales, higher costs, and feel pressure to increase their prices.
“They are feeling squeezed,” said Levesque. “Under these conditions it is no surprise they do not feel like going on a hiring spree anytime soon.”
About the AuthorPatrick Burnson, Executive Editor Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]
Subscribe to Modern Materials Handling Magazine!Subscribe today. It's FREE!
Find out what the world’s most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today!
Lift Truck Tips: Knowledge is Power Software system gives new facility a competitive edge View More From this Issue