The Small Business Health Index stabilized after two consecutive months of decline. All Index sub-components, including sensitive Credit Card Utilization Index, improved. Most sectors improved, painting a mixed picture for the overall Small Business sector.

1. Small Business Health Index
October 2012
Behavior of the Sub-components
Echoing improvements in the Index, all sub-components
saw an upturn in August. Notably, the Failure Ratio sub-
component improved after suffering its first decline of
2012 in July. Following a 9-point slip in the prior month,
the Failure Ratio’s 1-point August gain signifies sluggish
small business improvement overall. Not all sectors en-
joyed such meager improvement, however. The Manu-
facturing, Transportation, Real Estate, Construction and
Automotive sectors continue to register a downturn.
The Card Delinquency 61+ Days Past Due sub-compo-
nent for the overall economy also improved slightly,
reaching 47.86 in August compared to 47.72 during
the previous month. With exception of Automotive, all
sectors rose in this sub-component in August. In actual
terms, the percent of cards 61+ days past due for the
overall economy shows no month-to-month improve-
ment, but rather a decline of about 16 percent since
January 2012.
D&B Key Observations The Index’s Credit Card Utilization sub-component for
• he Small Business Health Index stabilized
T the overall economy measured an upswing in August
after two consecutive months of decline following three consecutive months of downturn. Credit
Card Utilization value stood at 78.31 for the month.
• ll Index sub-components, including the
A Because the sub-component was the earliest to exhibit
sensitive Credit Card Utilization Index, the downturn that engulfed the small business sector
improved for the past two months, its across-the-board improve-
ment may signal assurance for these businesses.
• ost sectors improved, painting a mixed
M
picture for the overall Small Business sector
Small Business Health Index: Overall (Dec 2004=100)
130
The U.S. small business sector is showing signs of life after
two months of declines, according to Dun Bradstreet’s
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August 2012 composite Small Business Health Index. The
index value totaled 96.51, an approximate 1-point increase
since July. With the exception of Transportation, all indi- 90
vidual sector indices improved. Such modest gains reflect
continuing macro headwinds that are restraining small 70
businesses, and paint a decidedly mixed business picture
for this vital economic sector. While evidence points to
50
structural improvement in the financial health of small
Dec 04
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businesses, tepid top-line growth and credit access con-
strictions remain significant challenges.
DB Proprietary Small Business Health Index, October 2012

2. The Percent Dollars 91+ Days Past Due sub-component SBHI Methodology
boasted the highest percentage increase— standing
The Index is based on 4 parts:
at 104.80 in August—not only for the overall economy
• Average Credit Card Utilization
but for most sectors as well. The Automotive industry
proved the sole exception, where the Card Utilization • ercent of Credit Cards with outstanding balance cycle
P
sub-component took the lead. 3+ (61+ Days Past Due)
The last three sub-components may spell slight credit • atio number of failures in the last 12 months over
R
access improvements for U.S. small businesses, but the prior 12 months
Failure Ratio index indicates business endurance in • ercent of delinquent dollars 91+ Days Past Due out
P
some sectors may be sliding. DB’s monthly proprietary of all outstanding balances
insights confirm a mixed picture for the sector.
The index is created by following a stratified sample of
At Dun Bradstreet, we are uniquely positioned and all small active businesses (excluding branches) with
obligated to provide our customers and the business total number of employees 100. The samples have the
community with relevant insight about the economy. same representation by Business Age, Number of
We utilize our rich data to create a measure of small Employees, Industry, and Payment experiences. Sample
business health as reflected in payment patterns, failure for each period contain ~10MM small businesses.
rates, and utilization on credit. Our simple index
The Index value for each of the 4 parts as of December
combines pro-cyclical and counter-cyclical elements—
2004 was considered as 100.
reflected in one number. The monthly index provides
a quick but comprehensive measure of small business An Index value higher than 100 means improvement
health relative to 2004. in a specific metric and happens when the value of the
attribute decreases as all 4 characteristics positively
The index is published monthly.
correlate with higher risk.
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