10/05/2012 02:34 pm ET

Private Company Sales Fall To A Two-Year Low: Report

National employment may be on the rise, but Main Street is still paralyzed by uncertainty and weak demand, according to a new report.

Private companies are growing at the slowest pace in nearly two years, Sageworks, a financial information company, reported Thursday. Average annual sales growth for private companies has fallen to around 5.4 percent from nearly 11 percent in January and from around 8 percent a year earlier, Sageworks’ analysis of private firm financials from the last three months showed.

Sageworks’ findings come amid a flurry of gloomy reports that show small firms have pulled back on hiring because of political uncertainty surrounding the upcoming election, the threat of the fiscal cliff and looming changes to the tax code.

A survey of companies with annual revenues between $100,000 to $250 million, done by PNC Financial Services Group, shows that less than one-quarter of companies expect to add new employees over the next six months, down from the 28 percent who said that in the spring survey.

A dim outlook on the economy’s future is part of the reason some said they were reluctant to hire. The PNC survey found 57 percent of business owners or managers are pessimistic about the nation’s economic path, up sharply from 43 percent who said that in the spring.

“The message to Washington would be, we would love for your policies to be good, but I would rather have a marginal policy than something that’s debated until the very end and thrown at people,” Sageworks CEO Brian Hamilton said in a statement.

Tax accountant Louis Balbirer tells Bloomberg BusinessWeek that “he can’t remember ever having confronted a situation like this” in nearly two decades of work with entrepreneurs. “We’re coming up with Plan A if this happens in the next few months, and Plan B if that happens,” he said.

Mitt Romney and Barack Obama battled over taxes in Wednesday evening’s debate with a particular focus on the effect that Bush-era tax cuts, which are set to expire at the end of the year, have on small businesses.

For the first time in the presidential race, both candidates publicly agreed that raising taxes on people who earn more than $250,000 per year would affect only three percent of small firms.



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