Small Business Shows Caution as Early Signs of Recovery Appear According to Administaff Survey

• Long-term concerns continue
• 48% expect increase in sales over the next two quarters
• Commissions up 4.1% in first positive move in 12 months

• Press Release
• Source: Administaff
• On 7:05 am EST, Monday November 2, 2009

HOUSTON--(BUSINESS WIRE)--More than 52 percent of small business owners expect an economic turnaround in 2010, while 13 percent indicate that a rebound is happening now, and 21 percent think the recovery will be in 2011 or later, according to the most recent Business Confidence Survey released today by Administaff (NYSE:ASF - News), a leading provider of human resource services for small and medium-sized businesses.

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The economy was listed by 76 percent of business owners as one of their biggest short-term concerns, down from 83 percent in July, followed by 50 percent citing government health care reform, 41 percent listing controlling operating costs and 39 percent specifying rising health care costs. However, for the longer-term, those who said they were “very concerned” once again listed the economy in fourth place at 41 percent, whereas 47 percent named government expansion and the effect on business as the leading issue, 45 percent cited potential tax increases as second and nearly 42 percent designated the federal deficit and the total national debt as third.

When respondents were asked about their pipeline for new business for the balance of 2009 and early 2010, 48 percent responded that they expect a sales increase, up from 41 percent last quarter; 33 percent predict it will stay the same, while only 11 percent anticipate decreasing sales, down from 15 percent in July; and 7 percent were unsure.

In addition, 58 percent of owners and managers of small and medium-sized businesses said that they are either meeting or exceeding their 2009 performance plans, with the remaining 42 percent reporting that they are doing worse than expected.

Administaff also announced compensation data from its base of more than 5,900 small and medium-sized businesses. Compared to the 2008 third quarter data, average compensation is up 0.9 percent; bonuses are down 0.9 percent, and commissions increased by 4.1 percent in 2009, their first positive move in a year. Overtime pay is running a low 7.4 percent of regular pay, up slightly from 7.1 percent in July but still under the 10-12 percent range that indicates a need for additional employees.

“Small and medium-sized businesses are signaling that they are cautiously optimistic about an economic rebound in 2010,” said Paul J. Sarvadi, Administaff's chairman and chief executive officer. “However, current political uncertainty appears to be a significant factor slowing the pace of recovery.”

In the survey conducted late last month, 61 percent of participants said they are maintaining current staffing levels, while 28 percent are adding new positions, up from 23 percent three months ago and 18 percent six months ago. Layoffs were named by 11 percent as a current management strategy versus 16 percent in July and 19 percent last May.

The survey also said that 54 percent of participants expect to maintain employee compensation at current levels into 2010, 23 percent plan increases versus 10 percent last quarter, 4 percent expect decreases, and 18 percent were unsure.

Concerning their current profit-generating activities, 70 percent of participants listed selling new accounts as the leading strategy, close to the 72 percent response rate in July. This was followed closely by 68 percent again naming increased service to clients. As a new activity named in the most recent survey, 50 percent said they were adding new services or products, while negotiating with vendors rose to 37 percent from 31 percent, and 30 percent of survey respondents listed investing in new improvement initiatives as fifth.

About the Business Confidence Survey

Respondents to the Administaff Business Confidence Survey are among the small and medium-sized companies Administaff serves throughout the country. The questions were designed to measure the pulse of the small-business community and gauge the activities and expectations of business owners in 2009 and 2010.

Administaff conducted the survey Oct. 13-15, 2009, of chief executive officers, chief financial officers and other executives in a variety of industries at its client companies throughout the United States. The overall sampling error of the national survey is +/- 5 percent at the 95 percent confidence level.

Administaff is the nation’s leading professional employer organization (PEO), serving as a full-service human resources department that provides small and medium-sized businesses with administrative relief, big-company benefits, reduced liabilities and a systematic way to improve productivity. The company operates 50 sales offices in 23 major markets. For additional information, visit Administaff’s Web site at http://www.administaff.com.

Administaff
Investor Relations Contact:
Senior Vice President, Finance
Chief Financial Officer and Treasurer
Douglas S. Sharp, 281-348-3232
or
News Media Contact:
Managing Director, Marketing
and Corporate Communications
Jason Cutbirth, 281-312-3085
Jason_Cutbirth@Administaff.com