more-arw search

Survey: Capital Spending Set to Increase for U.S. Small Businesses

Survey: Capital Spending Set to Increase for U.S. Small Businesses

The percentage of small business owners who plan to increase capital spending over the next 12 months has reached 28 percent, its highest level in four years, according to the recently published Wells Fargo/Gallup Small Business Index.

The survey, which includes responses from 600 small

The percentage of small business owners who plan to increase capital spending over the next 12 months has reached 28 percent, its highest level in four years, according to the recently published Wells Fargo/Gallup Small Business Index.

The survey, which includes responses from 600 small business owners from all 50 states last month, also indicates that the positive 5 percentage-point gap between those companies planning to increase capital spending and those looking to decrease is the largest since January 2008.

According to the study's data from January, the outlook jives with recent data that suggests 24 percent of small business owners have already begun to up their capital spending over the past year, an increase over the 19 percent seen in the October statistics.

Gallup chief economist Dennis Jacobs wrote in a post detailing the survey's results that the expectations for increased capital spending among small business owners coincides with optimistic hiring projections and overall confidence in the economy.

"While small-business owners' overall optimism may be the driving force behind their increased capital spending intentions, their credit expectations may also play a role in those decisions," Jacobs noted. "It is easier for owners to invest more in their companies when they feel credit is becoming somewhat more, rather than less, available. Although it may still be difficult for many small-business owners to get credit, their views of doing so have improved in comparison with the past few years."

Still, Jacobs explained that while the data indicates small business owners are becoming more optimistic, this does not necessarily mean they will follow through on their projections. Specifically, he pointed to rising gas prices as a hindrance to consumer spending, which could, in turn, ramp up the pressure on smaller companies. This would likely cut into the capital spending forecasts, Jacobs said.

The new Wells Fargo/Gallup poll results do, however, offer support for another recent Wells Fargo survey, which noted small business owners are overall more optimistic than they have been since July 2008. Among the data uncovered in this study were 49 percent of these individuals expected revenues to increase and 22 percent expect the number of jobs at their company to grow by at least a small margin, according to a release from earlier this month.

Topics: