The Wall Street Journal/Vistage Small Business CEO Confidence Index rose for the fifth consecutive month, reaching 89.5 in September 2020, doubling the low of 44.7 recorded in April. The monthly gain of 11.3 points in the overall Index also signifies a gain in momentum after slowing in August. While all factors that comprise the Index improved from last month, the largest change was the decrease in pessimism about the U.S. economy; 83% of small businesses reported that the economy recently worsened compared to 88% last month.
Also significant is the 15-point gain in the proportion of small businesses that believe the economic conditions will be better in the coming year, growing to 56% after stalling at 41% in July and August.
As Dr. Richard Curtin, a researcher from University of Michigan who analyzed the data notes, “While the gains forecast a rise in third quarter GDP, the data also reflects the realization among many small businesses that substantial hardships remain, with survival dependent on additional aid and a vaccine that ends the coronavirus.”
Recovery progresses slowly
Data show that small business CEOs indicate that the timeline of recovery is improving slowly. Dr. Curtin cautions that, “Resilience comes from facing adversity, and after the longest expansion in history, this lesson was long overdue.” Just over half (56%) of small businesses reported that economic recovery would begin in six months to more than a year; last month that figure was substantially higher at 71%. Forty-five percent of small businesses reported that it would take at least six months to a year for their business to recover, down from 53% in August. According to the September survey, less than a quarter (23%) of small businesses expect revenue declines of 25% or more due to the pandemic, down from 28% in August.
Plans to return to the workplace vary
As different parts of the country have different restrictions in their reopening plans and industries have diverse requirements from workers, this has caused a great deal of variation in the proportion of small businesses that have returned to the office. Nearly two-thirds (64%) of small businesses have had all employees come back full or part-time. Just 6% of small businesses surveyed have gone fully remote.
For the 10% who reported plans to come back to the workplace in the future, the majority are waiting until 2021. Only time will tell if those plans stay intact as cooler weather and holiday gatherings bring people together inside.
Workforce expansion planned for next 3 months
With revenue expectations improving to levels recorded in March, workforce expansion is also on the rise. The proportion of small businesses that plan to increase their workforce has increased 11 percentage points in the past month, and 47% indicate that expansion will occur in the next 3 months. Even more significant is that just 8% of small businesses plan to reduce staff, a 4x reduction from 32% in April. With a broad range of applicants stemming from high unemployment, rigor in the selection process will be more important now than ever.
The September WSJ/Vistage Small Business CEO survey was conducted September 8 – 15, 2020 and gathered 679 responses from CEOs and leaders of small businesses with revenues between $1 million and $20 million. Our October survey, in the field October 5 – 12, 2020 will continue to measure expectations of small businesses through the recovery.