Getting the headlines right on "services" index.

Kudos to the Wall Street Journal for getting the headlines right! Their Real Time Economics blog (“Vital Signs Chart: Slowing Nonmanufacturing Growth“) correctly states that the ISM Index is of non-manufacturing companies — not “services”. As I’ve noted before, the Index includes mining, agriculture, construction as well as services. ISM does not publish the breakdown by industry in their press release. But it could be that the slowdown is due in part to contractions in three industries: Mining; Health Care & Social Assistance; and Agriculture, Forestry, Fishing & Hunting. Slower growth in construction would also affect wholesale and retail trade. It would be interesting to be able to parse the data to see what is really happening in the “service” and “intangibles” sectors – as well as construction, mining and agriculture.
Too bad that TIME keeps getting it wrong (“U.S. Service Firms Grow More Slowly, Hiring Weakens”).

Small Business Friendliness Survey and the Kauffman Foundation have released their 2013 survey of small business attitudes toward state and local government. While I am always a little skeptical of these types of surveys (for example, there is the curious and generally unexplainable finding that Washington DC jumped from a D+ in 2012 to a B in 2013), the overall finding is of interest:

“Small businesses are top-of-mind for lawmakers nationwide, but too often their needs are more a matter of conjecture rather than actual evidence,” says Sander Daniels, co-founder of “Some 7,000 businesses owners across the country have told us that they care about a lot more than just taxes – for most businesses, simple licensing regulations and helpful training programs are even more important to their success.”
Some of the key findings include:
   Professional licensing requirements were 30 percent more important than taxes in determining a state’s overall business-friendliness, confirming the findings from last year’s study. Furthermore, this year’s research revealed that 40 percent of U.S. small businesses are subject to licensing regulations by multiple jurisdictions or levels of government.
   Utah was the top rated state, and Austin, TX was the top rated city. At the other end of the spectrum, Rhode Island and Newark, NJ were the lowest rated state and city.
   The ease of obtaining health insurance was an important factor for many businesses. One-third of small business owners rated obtaining and keeping health insurance as “Very Difficult,” versus only 6 percent who rated it “Very Easy.”
   Small businesses were relatively unconcerned with tax rates – more than half of small business owners felt they pay about the right share of taxes.

In other words, intangibles — positive relationship with local government, worker skills — were more important than taxes to small business success.
The part about training is of special interest. According to the survey, “Business owners’ awareness of relevant training and networking programs was a significant factor in determining how they rated a state’s friendliness, more important than whether they felt their share of taxes was fair.” What would be useful now is a follow up on the state and local government training and networking programs that the respondents found helpful.