Published March 2013
The small business sector started 2013 with a bang, as more businesses paid their bills on time and fewer relied on credit card debt. The improvements fueled a 3.2-point increase in D&B’s Small Business Health Index. Business services performed strongest in January 2013, followed by robust improvements in manufacturing. Other economic indicators are driving small business health: production of appliances, furniture, and carpeting rose 2 percent, while sales of retail and food services and food prices also rose.
Small businesses have reason for optimism in 2013, although challenges remain. Higher gas prices, rising payroll taxes, and federal sequestration cuts pose considerable obstacles to economic growth. Improving retail, non-durable manufacturing, and on-time bill payments may move the economy forward. Nevertheless, small business volatility will likely be the norm for the first few months of 2013.
D&B’s monthly Small Business Health Index (SBHI) measures small business health through payment patterns, failure rates, and credit utilization. The SBHI follows a sampling of all active small businesses with fewer than 100 employees and combines pro- and counter-cyclical elements to provide a simple, representative number. Using 2004 as the base year (Index value 100), improvement is designated by an Index value above 100.