Business Owners' Outlook Mostly Positive for 2006, According to Administaff Survey

Companies Expect to Increase Hiring, Salaries and Capital Spending



Nov 03, 2005, 00:00 ET from Administaff, Inc.

    HOUSTON, Nov. 3 /PRNewswire-FirstCall/ -- Owners of small and medium-sized
 companies are optimistic about the business outlook for 2006 and are
 predicting growth for their companies in the coming year, according to results
 of the Administaff (NYSE:   ASF) Business Confidence Survey released today.
 Half of the survey respondents intend to invest more in their businesses in
 2006 compared to the prior year, and most plan to increase both salaries and
 hiring.
     More than two-thirds -- 68 percent -- of respondents said they expect to
 experience more growth in the coming year than in 2005.  This compares to
 78 percent of respondents in a January 2005 survey, who said they were
 expecting higher year-over-year growth going into 2005.
     While most business owners say their outlook is bright for 2006, they are
 also keeping a watchful eye on the economy.  More than half -- 54 percent --
 reported they are "optimistic" about the economy in the coming year, while
 about a third said they are undecided.
     Also today, Administaff released compensation data compiled from its
 client base of more than 4,900 small and medium-sized businesses throughout
 the country.  A comparison of third-quarter data against the same period in
 2004 shows that average compensation is up 5.8 percent and average commissions
 have increased 7.2 percent.  In addition, overtime pay is running 10.1 percent
 of regular pay.
     "Based on employment data we're seeing through the third quarter, plus the
 outlook that business owners are expressing for 2006, business sentiment seems
 to range from mostly strong to cautiously optimistic," said Paul J. Sarvadi,
 chairman and chief executive officer of Administaff.
 
     Other highlights of the survey include:
      *  64 percent plan to increase salaries and wages, less than 2 percent
         expect salaries to fall, and the remainder said they would hold
         compensation at 2005 levels
      *  66 percent intend to add employees
      *  73 percent said overtime is likely to remain the same
      *  50 percent project an increase in capital spending
 
     While most business owners said they plan to add staff, they also are
 focusing efforts on keeping existing employees.  More than two-thirds --
 77 percent -- said they plan to take steps to boost employee retention.
 
     Key Business Issues
     Cost and availability of health care remains a concern for small business
 owners.  Respondents to the survey overwhelmingly said that making health care
 more accessible and affordable is the most important issue they are grappling
 with.  Other challenges, listed in ranking order, are:
 
      *  Curb rising energy costs
      *  Reduce taxes
      *  Ease the regulatory paperwork burden
      *  Simplify the tax code
      *  Eliminate frivolous lawsuits
 
     Some respondents said they are watching to see how economic and political
 factors, such as the rising price of fuel and the war on terror, may affect
 their businesses.
     "We are optimistic in a guarded way," one business owner wrote.  "We are
 concerned that although we support the country's efforts against terror,
 something may happen to hurt consumer confidence, or higher interest rates
 and/or energy costs could stagnate the economy."
     For others, the outlook is more positive.  "We are anticipating some
 aggressive growth in 2006," said one of the respondents.  Another reported,
 "2006 will be a good year for us."
 
     About the Business Confidence Survey
     The Administaff Business Confidence Survey was conducted in late October.
 Researchers surveyed a random sample of chief executive officers, chief
 financial officers and other executives in a variety of industries at
 Administaff client companies across the United States.  The overall sampling
 error is +/- 5 percent at the 90 percent confidence level.
 
     Houston-based Administaff (NYSE:   ASF) is the nation's leading professional
 employer organization, serving as a full-service human resources department
 for thousands of small and medium-sized businesses throughout the United
 States.  The company's Personnel Management System(SM) provides a
 comprehensive human resources solution that includes employer liability
 management, government compliance, benefits management, employment
 administration, recruiting and selection, performance management, training and
 development, and business services.  For additional information, visit
 http://www.administaff.com .
 
     The statements contained herein that are not historical facts are forward-
 looking statements within the meaning of the federal securities laws (Section
 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
 Act of 1934).  You can identify such forward-looking statements by the words
 "expects," "intends," "plans," "projects," "believes," "estimates," "likely,"
 "possibly," "probably," "goal," "objective," "assume," "outlook," "guidance,"
 "predicts," "appears," "indicator" and similar expressions.  Forward-looking
 statements involve a number of risks and uncertainties.  In the normal course
 of business, Administaff, Inc., in an effort to help keep our stockholders and
 the public informed about our operations, may from time to time issue such
 forward-looking statements, either orally or in writing.  Generally, these
 statements relate to business plans or strategies, projected or anticipated
 benefits or other consequences of such plans or strategies, or projections
 involving anticipated revenues, earnings, unit growth, profit per worksite
 employee, pricing, operating expenses or other aspects of operating results.
 We base the forward-looking statements on our current expectations, estimates
 and projections.  These statements are not guarantees of future performance
 and involve risks and uncertainties that we cannot predict.  In addition, we
 have based many of these forward-looking statements on assumptions about
 future events that may prove to be inaccurate.  Therefore, the actual results
 of the future events described in such forward-looking statements could differ
 materially from those stated in such forward-looking statements.  Among the
 factors that could cause actual results to differ materially are: (i) changes
 in general economic conditions; (ii) regulatory and tax developments and
 possible adverse application of various federal, state and local regulations;
 (iii) changes in our direct costs and operating expenses including, but not
 limited to, increases in health insurance premiums and workers' compensation
 rates and underlying claims trends, financial solvency of workers'
 compensation carriers and other insurers, state unemployment tax rates,
 liabilities for employee and client actions or payroll-related claims, changes
 in the costs of expanding into new markets, and failure to manage growth of
 our operations; (iv) our ability to effectively manage our retirement services
 operation; (v) the effectiveness of our sales and marketing efforts; (vi)
 changes in the competitive environment in the PEO industry, including the
 entrance of new competitors and our ability to renew or replace client
 companies; (vii) our liability for worksite employee payroll and benefits
 costs; and (viii) an adverse final judgment or settlement of claims against
 Administaff.  These factors are discussed in detail in our 2004 annual report
 on Form 10-K and elsewhere in this report.  Any of these factors, or a
 combination of such factors, could materially affect the results of our
 operations and whether forward-looking statements we make ultimately prove to
 be accurate.
 
 

SOURCE Administaff, Inc.