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Confidence Up Among U.S. Small Businesses

23 July 2010

North America Reveals Second Highest Increase in Index of All Markets

Business Outlook among Global SMEs Continues Steady Climb; Emerging Markets Remain More Confident Than Developed Markets

Key U.S. Highlights:

  • Double digit jump in confidence level of U.S. SMEs versus Q4 2009
  • Majority expect local economic growth
  • Growing number of SMEs ready to increase recruitment

New York, NY - HSBC's Small Business Confidence Monitor revealed that small businesses across the globe are showing increased confidence as they begin the second half of 2010, with those in the U.S. seeing one of the most significant upticks. While business confidence remains strongest in emerging markets, U.S. small businesses are demonstrating improved local economic growth, capital expenditure and recruitment plans, and a more optimistic outlook than they did heading into the start of the year.

The semi-annual HSBC Small Business Confidence Monitor gauges the six-month outlook of small businesses on local economic growth, capital investment plans and recruitment. This latest wave is the largest international survey of its kind, covering over 6,300 SMEs across 21 markets in Asia, the Middle East, Europe, North America and Latin America. The results were used to calculate an index ranging from 0 to 200 where 200 represents the highest confidence level, 0 represents the lowest, and 100, neutral.

In the most recent survey, confidence rose across the globe from 111 to 118, with emerging markets (122) appearing seven points higher than developed markets (115). The outlook for North America was 119, up 12 points from 107 in 4Q09; in the U.S. specifically, the index climbed from 106 in 4Q09 to 120. Of the nearly two dozen markets surveyed, North America was second only to Turkey in the biggest jump in confidence. 

"U.S. small businesses were one of the sectors hardest hit by the economic downturn; the fact that we're now seeing a jump in confidence for U.S. SMEs is a sign that the economy is trending in a positive direction," said Mark Luppi, Executive Vice President and Head of Business Banking for HSBC - North America.

"This is coupled with the encouraging news that these same businesses expect their local growth, as well as their capital expenditure and recruitment plans, to remain consistent or exceed what they reported at the end of 2009."

Additional U.S. findings from the sixth wave of the HSBC Small Business Confidence Monitor include: 

  • Eighty-seven per cent (87%) of U.S. SMEs anticipate that their local economic growth will be maintained or increase in the next six months.
  • Nearly three quarters of SMEs feel that their recruitment plans will remain unchanged (74% vs 85% in 4Q09). A growing number of SMEs are seeing growth, and 12% of those surveyed see recruitment growth exceeding 20%.
  • Eighty-six per cent (86%) of U.S. SMEs expect their capital expenditure plans to maintain at the same level or increase over the next six months.
  • More than half (59%) of U.S. SMEs see their prospects for the second half of 2010 improving compared with the first half of the year; about a third (31%) expect prospects to remain the same.
  • For U.S. SMEs, the top barriers for doing business internationally include: local regulations and complexities (22%): complexity of certain international markets (15%): concern about dealing with foreign currencies (13%): and availability of financing (13%). 
  • Although SMEs' overall sentiment is trending in a positive direction, they cited the U.S. and global economic conditions (49%), inflation (29%) and change in regulation 29%) as their top business concerns for the next six months.

Added Luppi: "The perceived challenges should not overshadow the opportunities that exist, especially in the emerging markets."

Notes to editors:

1: Emerging markets include Hong Kong, India, Indonesia, mainland China, Malaysia, Singapore, Taiwan, Vietnam, Egypt, Qatar, Saudi Arabia, UAE, Turkey, Argentina, Brazil, Panama and Mexico.

2: Developed markets include US, Canada, UK and France.

More details of the survey

This is the sixth wave of the HSBC Small Business Confidence Monitor, which was conducted in May and June 2010 by research agency TNS for HSBC Commercial Banking. The results were used to calculate an index ranging from 0 to 200 where 200 represents the highest confidence level, 0 represents the lowest, and 100, neutral. Please see the attached report Global Small Business Confidence Monitor - July 2010 for more information.

About HSBC Bank USA, N.A.

HSBC Bank USA, National Association offers a full range of banking products and services to individuals, small businesses, corporations, institutions and governments. Its network extends to over 475  branches, with more than 370 in New York State as well as towns and cities across Florida, California, Washington, D.C., Pennsylvania, New Jersey, Delaware, Oregon, Washington, Maryland, Illinois, Connecticut and Virginia.  HSBC Bank USA, N.A. is the principal subsidiary of HSBC USA Inc., an indirect, wholly-owned subsidiary of HSBC North America Holdings Inc., one of the largest bank holding companies in the United States by assets. Member FDIC.  HSBC Bank USA, N.A., with total assets of $187 billion as of 31 March 2010, serves its 3.8 million customers through its personal financial services, commercial banking, private banking and global banking and markets segments.

HSBC Holdings plc

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 8,000 offices in 88 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With assets of US$2,364 billion at 31 December 2009, HSBC is one of the world's largest banking and financial services organizations. HSBC is marketed worldwide as 'the world's local bank'.

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