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

By ·

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 Author

Patrick 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!

Article Topics

· All Topics
Latest Whitepaper
Sorting Out Your Sortation Options
Guiding you through the process of evaluating and selecting the right “mission-critical” sortation solution
Download Today!
From the April 2017 Issue
How does a fastgrowing, e-commerce startup company build out order fulfillment capabilities? Thrive Market answered that question with its new facility in Indiana.
2017 Warehouse/DC Equipment Survey: Investment up as service pressures rise
Putaway 101: Everything in its Place
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
2016 Warehouse/DC Operations Webcast: Confronting omni-channel complexity
During this webcast we’ll examine the current activities, trends, and best practices in warehouse and DC operations management and how companies plan to address complex issues associate with omni-channel fulfillment.
Register Today!
EDITORS' PICKS
ProMat closes: Make your plans for Modex 2018
With a record number of exhibitors and attendees seen at ProMat 2017, MHI anticipates more of the...
Keynote: Magic is the result of over-preparation and over-delivering to customers
During his keynote presentation Wednesday afternoon, Earvin “Magic” Johnson told a packed...

Keynote panel confirms digital supply chain shift seen in new MHI study
Wednesday’s keynote panelists agreed it is time to embrace the shift to digital supply chains seen...
MHI to honor original products, solutions with 5th-annual Innovation Awards
On Wednesday, during MHI Industry Night with Dana Carvey, the winners of the 5th-annual MHI...