Small Business Confidence Holding Steady: Report

Over the next three months, 90 percent of merchants expect to keep headcount the same or add jobs to their businesses.

Business optimism is holding steady, following the jump in economic sentiment in the previous quarter that was fueled by 2010 holiday sale increases, found MerchantCircle, a social network of local business owners in the United States. In fact, according to the 2011 Q2 results of MerchantCircle's quarterly Merchant Confidence Index, the current MCI score is 63.2, similar to the score from the previous quarter of 63.5.

The Merchant Confidence Index is a survey of local business owners across the country sharing their confidence levels in the current economy, and their expectations of future revenue, marketing spend and hiring.

Merchants remain cautiously optimistic about the economy and revenues: 57 percent of small business owners expect revenue to "improve" or "slightly improve" over the next three months, unchanged from the previous quarter. However, when asked to rate the economy compared with 12 months ago, the percentage that believed it had stayed the same or improved dipped to 64 percent this quarter from 70 percent last quarter.

Over the next three months, 90 percent of merchants expect to keep headcount the same or plan to add jobs to their businesses, down slightly from the previous quarter, when 92 percent of merchants expected to maintain or increase headcount. However, small business owners will continue last quarter's trend in marketing and advertising expenditure, with 85 percent of small business owners expecting to increase or keep marketing expenditure the same over the next three months, compared with 84 percent in the previous quarter.

"The afterglow from improved holiday sales in 2010 continues to linger, as merchants hold on to the hope of improved revenues in 2011," said Darren Waddell, vice president of marketing at MerchantCircle. "However, the optimism remains cautious, tempered by slight declines in perceptions of economic improvement over the next 12 months and in hiring."

This sixth Merchant Confidence Index survey was fielded online, between April 30 and June 6, 2011, and sent to a random sample of MerchantCircle's member base of more than 1.6 million local business owners. There were 4,942 total responses from local business owners across the United States. Responding businesses classified themselves as legal and financial services, automotive, health and beauty, entertainment, travel and more, with 78 percent of respondents employing fewer than five people. The survey data can be broken out by state, business type or business size (by headcount) upon request, the company noted in a release.