Small businesses fret over Massachusetts economy

By Ezra Blair - December 15, 2005

The business climate in Massachusetts has begun to sour, according to the latest quarterly survey conducted by the National Federation of Independent Business (NFIB).

Of the 362 small-business employers contacted for the Massachusetts Small-Business Conditions Survey, 34 percent said that conditions in their market area are "good." That is a drop from the 41 percent who called business conditions "good" last quarter.

Among the contributing factors, the survey reported a drop in sales this quarter. In total, 39 percent of the business owners said that net sales were "good." That is down significantly from the 48 percent that said sales were good last quarter. Profits are also down. Twenty-four percent of the respondents said that net profits were "good." Last quarter, 32 percent of the businesses said sales were good.

When asked to rank their most important business problem, the business owners continued to cite health care costs, taxes, inflation, and weak sales, as the most pressing issues. In addition, 65 percent of the business owners surveyed said that rising energy costs have negatively impacted business. Nineteen percent said called the impact "seriously negative."

Despite the slipping number, business owners remain optimistic about the future, with a net 60 percent reporting a "good" outlook for the next three months. Those surveyed also said that the business environment is more supportive of small-businesses than it was three months ago. A net 20 percent, up from 11 percent last quarter, said the overall state business climate was supportive of small businesses.

The NFIB also surveyed Connecticut and New York businesses. New York businesses reported a bleaker economy than the Bay State businesses, while Connecticut employers said that the economy was improving.

In New York, only 17 percent of the respondents called the business condition "good." That is down significantly from 29 percent last quarter. The economic forecast was also grim, with 48 percent reporting a "good" outlook for the next three months. Last quarter 53 percent of New York businesses had a "good" outlook.

It was a different story in Connecticut where 35 percent of businesses said that conditions in their market areas were "good." That is up from 29 percent last quarter. A net 29 percent said their profits during the fourth quarter could be considered "good," compared to a net 13 percent three months earlier.

Last week, Gary Cogley, Martha's Vineyard Chamber of Commerce executive director, said that state and national surveys are not always representative of the Island economy. "I think we may be pretty well insulated from the rest of the state and even the Cape or southeastern Massachusetts," said Mr. Cogley. "We are such a cyclical region, that we have already begun to cycle down for the season."

While there is a seasonal ebb and flow of business on the Island, Mr. Cogley said that the business owners appear positive about the future economy. "It is my opinion that people on the Island are optimistic about the opportunity to do business here on the Vineyard," he said. "I see a lot of enthusiasm."

Mr. Cogley attributed much of that enthusiasm to proactive business associations on the Island. "I'm encouraged by the amount of activity on the town level with the local business groups like the Edgartown Board of Trade, the Oak Bluffs Business Association and the Tisbury Business association," he said. "These groups are out actively seeking ideas for things to do to attract business and to help the Island to better handle the business that we do have."