Small Business Economic Confidence Recovering According to Administaff Survey

More than 39 percent of small business owners expect an economic turnaround in 2010, while 44 percent think a rebound will occur in 2011 and 17 percent are unsure, according to the most recent Business Confidence Survey released today by Administaff (NYSE:ASF), a leading provider of human resources services for small and medium-sized businesses.

The economy was listed by 71 percent of business owners as one of their biggest short-term concerns, down from 77 percent in October and 83 percent last July, followed by 54 percent citing government health care reform, 43 percent specifying rising health care costs and 41 percent listing controlling operating costs. However, for the longer-term, those who said they were "very concerned” again listed the economy in fourth place at 36 percent, whereas 55 percent named government expansion and the effect on business as the leading issue, 52 percent designated the federal deficit and the total national debt as second (versus 42 percent in the last survey), and 50 percent cited potential tax increases as third.

When respondents were asked about their pipelines for new business for the balance of 2010, 55 percent responded that they expect a sales increase, up from 48 percent last October; 30 percent predicted it will stay the same, while only 7 percent anticipated decreasing sales, down from 11 percent last fall and 15 percent in July 2009; and 7 percent were unsure.

In addition, 72 percent of owners and managers of small and medium-sized businesses said that they are either meeting or exceeding their 2010 performance plans compared to 58 percent in the last survey, while the remaining 28 percent reported that they are doing worse than expected.

Administaff also announced compensation data from its base of more than 5,700 small and medium-sized businesses. Compared to the 2009 first quarter data, average compensation is up 1.8 percent, bonuses are up 1.6 percent, and commissions increased by 8.8 percent in 2010. Overtime pay is still slow, running 7.5 percent of regular pay, under the 10 to 12 percent range that indicates a need for additional employees.

"The current economic environment is prompting owners of small and medium-sized businesses to take more positive, but guarded, steps toward moving ahead in 2010,” said Paul J. Sarvadi, Administaff's chairman and chief executive officer. "Commerce, for many industries, is picking up, but some business segments are still waiting on constructive recovery signals.”

In the survey conducted late last month, 60 percent of participants said they are maintaining current staffing levels, while 31 percent are adding new positions, up from 28 percent six months ago, and 23 percent nine months ago. Layoffs were named by 9 percent as a current management strategy versus 11 percent in October and 16 percent last July.

The survey also said that 57 percent of participants expected to maintain employee compensation at current levels throughout 2010, 22 percent planned increases, 4 percent expected decreases, and 17 percent were unsure.

Concerning their current profit-generating activities, more than 73 percent of participants listed selling new accounts as the leading strategy, a slight increase to the 70 percent response rate in October. This was followed by 68 percent naming increased service to clients. For the second consecutive time as a category, 52 percent said they were adding new services or products, while 31 percent named investing in new improvements, and 30 percent of survey respondents listed negotiating with vendors as fifth.

About the Business Confidence Survey

Respondents to the Administaff Business Confidence Survey are among the small and medium-sized companies Administaff serves throughout the country. The questions were designed to measure the pulse of the small-business community and gauge the activities and expectations of business owners in 2010.

Administaff conducted the survey April 20-22, 2010, of chief executive officers, chief financial officers and other executives in a variety of industries at its client companies throughout the United States. The overall sampling error of the national survey is +/- 5 percent at the 95 percent confidence level.

Administaff is the nation’s leading professional employer organization (PEO), serving as a full-service human resources department that provides small and medium-sized businesses with administrative relief, big-company benefits, reduced liabilities and a systematic way to improve productivity. The company operates 50 sales offices in 23 major markets. For additional information, visit Administaff’s website at http://www.administaff.com.