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Small Business Health Index Sept. 2012


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The Small Business sector continues to slow and may have stalled. All sectors have been impacted, with the Automotive Index registering the largest decline. Financial pressure may be increasing as components have weakened, including the previously favorable rate of small business failures.

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Small Business Health Index Sept. 2012

  1. 1. Small Business Health IndexSeptember 2012 Behavior of the Sub-components All sub-components of the Index declined during the current month, confirming the broad-based sluggish- ness. The Credit Card Utilization Index, the earliest one to pick up the slant, has registered a decline for the third consecutive month. The only sectors to register an increase in this sub-component are Retail Trade and Transportation. The value of this sub-component of the overall index continued to move in an unfavorable direction at 77.41 in July 2012. This implies that the outlook for access to credit for small businesses remains restrained in most sectors of the economy. The Card Delinquency 61+ Days Past Due Index shows a one-point decline for the overall economy, standing at 47.72. All sectors, without any exceptions, show a decline in this sub-component in July 2012. On a posi- tive note, the percent of cards 61+ days past due for the overall economy has increased by roughly 4 percent D&B Key Observations since the beginning of the second quarter of 2012. • he Small Business sector continues to slow T The overall declining trend continues with the Percent and may have stalled. Dollars 91+ Days Past Due Index. In July the index stands • All sectors have been impacted, with the at 103.63, a slight decline compared to June. The percent Automotive Index registering the largest of delinquent dollars 91+ days past due for the overall decline. economy has decreased by roughly 2 percent in July 2012 since the beginning of the second quarter of 2012. • Financial pressure may be increasing as components have weakened, including the previously favorable rate of small business failures. Small Business Health Index: Overall (Dec 2004=100) 120Dun Bradstreet’s monthly composite Small BusinessHealth Index through July 2012 continues on the down- 100ward path that started last month. The value of theindex stood at 95.73 in July, which is a two-point decline 80compared to last month. Most troubling is that all sec-tors have now contributed to the decline, as comparedto only a few sectors previously. The Automotive Index 60shows the highest percentage decline (-7.53 %) duringJuly 2012 while the Manufacturing sector shows the 40 Dec 04 Q3 05 Q2 06 Q1 07 Q4 07 Q3 08 Q2 09 Q1 10 Q4 10 Q3 11 Feb 12 May 12lowest (-0.28 %). The Small Business Health Index isin-line with other macroeconomic indicators andprovides confirmation that this vital sector of the U.S.economy is going through its own version of a flat spot. DB Proprietary Small Business Health Index, September 2012
  2. 2. The Failure Ratio sub-component, which has been a SBHI Methodologybright spot on the rise since the beginning of 2012, has The Small Business Health Index is based on 4 parts:fallen for the first time this year for the overall economy • Average Credit Card Utilizationand all its sectors. This is troubling as it indicates thatthe number of small business failures has increased. For • ercent of Credit Cards with outstanding balance cycle Pthe overall economy, this component had undergone a 3+ (61+ Days Past Due)9-point decline in a single month, standing at 154.17 in • atio number of failures in the last 12 months over RJuly compared to 163.22 in June. The slowdown in the prior 12 monthsoverall U.S. economy seems to be finally affecting the • ercent of delinquent dollars 91+ Days Past Due out Pstability of small businesses. of all outstanding balancesAt Dun Bradstreet, we are uniquely positioned and The index is created by following a stratified samplehave an obligation to provide our customers and the of all small active businesses (excluding branches) withbusiness community with relevant insight about the total number of employees 100. The samples haveeconomy. We have utilized our rich data to create a the same representation by Business Age, Number ofmeasure of small business health as is reflected in their Employees, Industry, and Payment experiences. Samplepayment patterns, failure rates, and utilization on credit. for each period contain ~10MM small businesses.Our simple index is a combination of pro-cyclical andcounter-cyclical elements—reflected in one number. The Index value for each of the 4 parts as of DecemberWe are using 2004 as the base year. The index is a 2004 was considered as 100.measurement of small business health relative to 2004. If Index in any of the following periods is higher thanThe index should provide the user a quick but compre- 100—it means improvement in specific metric. Ithensive view of the health of small businesses. happens when value of the attribute decreases as allThe index is published monthly. 4 characteristics positively correlate with higher risk. For more information, please visit Bradstreet is the world’s leading source of commercial information and insight on businesses, enabling companies to Decide with Confidence® for over 170 years.DB’s global commercial database contains more than 210 million business records, enhanced by our proprietary DUNSRight® Quality Process, providing our customers withquality business information. This quality information is the foundation of our global solutions that customers rely on to make critical business decisions.© Dun Bradstreet, Inc. 2000-2012. All rights reserved. (DB-3344 09/12)