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Small Businesses Remain Positive but Slow Growth Plans, According to Insperity Survey

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Small business owners continue to reflect the optimism seen in January, but now show moderated growth plans related to new hires, compensation levels and overall sales, according to the most recent Business Confidence Survey released today by Insperity, Inc. (NYSE:NSP) , a leading provider of human resources and business performance solutions for America’s best businesses. Responses indicate that 40 percent of business owners are adding employees compared to 50 percent in January and 31 percent in October; and 52 percent are maintaining current staffing levels versus 47 percent last quarter and 64 percent in October. Eight percent are planning layoffs, up from three percent in January.

“Business owners are continuing the solid growth pattern reflected in the January survey, but at a somewhat slower pace,” said Paul J. Sarvadi, Insperity chairman and chief executive officer. “One of the key contributions made by the nation’s small business community is the ability to adjust quickly to economic uncertainties and turn them into profitable opportunities. The survey results suggest they are doing just that.”

Insperity also announced compensation metrics from its base of thousands of small and medium-sized Workforce Optimization(R) clients from across the United States. Average compensation for the first quarter of 2015 increased 2.5 percent over the first quarter of 2014, and bonuses were up 11.6 percent compared to the year-ago period. Overtime pay for the first quarter of 2015 was 10.9 percent of regular pay compared to 9.4 percent in the first quarter of 2014, above the 10 percent level that generally indicates a need for additional employees for the fourth quarter in a row.

According to the survey, 74 percent of participants said they are meeting or exceeding their initial 2015 performance objectives, down from 87 percent in January, but up slightly from 72 percent in October. The current survey indicated 26 percent expect to do worse in 2015 compared to 13 percent in January, 28 percent in October and 8 percent in January 2014. When asked how the current economy is affecting the bottom line of their business, 22 percent said it is increasing earnings, 38 percent again replied with no real change, 33 percent stated that it is decreasing earnings and 7 percent are unsure.

The economy and hiring the right people again ranked on top of the list of short-term concerns at 51 percent and 50 percent, respectively. Rising health care costs took third place at 44 percent, while controlling overall operational costs was a close fourth at 43 percent. Long-term issues of concern to respondents were again led by government expansion and its effect on business at 50 percent, potential tax increases at 48 percent, the federal deficit and the total national debt came in at 41 percent, and the economy was 40 percent.

In spite of some responses indicating a pullback from a more aggressive economic stance in January, 39 percent still plan to increase employee compensation, down only slightly from 41 percent last quarter. This compares to 23 percent in October and 28 percent in July. The survey indicated 48 percent plan to maintain compensation at current levels, versus 43 percent last quarter and 69 percent in October; as in January, two percent expect decreases; and 12 percent are unsure compared to 14 percent last January.

Concerning their current profit-generating activities, 69 percent listed selling new accounts and 65 percent cited increased service to existing clients, both the same percentages as January. This was followed by 44 percent who selected adding new services or products versus 50 percent in January, and 33 percent chose investing in new improvement initiatives.

Insperity conducted the survey April 7-9, 2015, of chief executive officers, chief financial officers and other executives in a variety of industries from its base of approximately 5,400 Workforce Optimization(R) clients throughout the United States. The overall sampling error of the national survey is (+/- 4.5) percent at the 95 percent confidence level.

Insperity, a trusted advisor to America’s best businesses for more than 29 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity(R) Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace. Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce Optimization solution. Additional company offerings include Human Capital Management, Payroll Services, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2014 revenues of $2.4 billion, Insperity operates in 57 offices throughout the United States. For more information, visit http://www.insperity.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,” “opportunity,” “objective,” “target,” “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, Insperity, 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 expectations, estimates and projections at the time such statements are made. 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) adverse economic conditions; (ii) regulatory and tax developments and possible adverse application of various federal, state and local regulations; (iii) the ability to secure competitive replacement contracts for health insurance and workers’ compensation contracts at expiration of current contracts; (iv) increases in health insurance costs and workers’ compensation rates and underlying claims trends, health care reform, financial solvency of workers’ compensation carriers, other insurers or financial institutions, state unemployment tax rates, liabilities for employee and client actions or payroll-related claims; (v) failure to manage growth of our operations and the effectiveness of our sales and marketing efforts; (vi) the competitive environment in the PEO industry may impact growth and/or profitability; (vii) our liability for worksite employee payroll, payroll taxes and benefits costs; (viii) our liability for disclosure of sensitive or private information; (ix) our ability to integrate or realize expected returns on our acquisitions; (x) failure of our information technology systems; (xi) an adverse final judgment or settlement of claims against Insperity; and (xii) the actions of certain stockholders could disrupt our business. These factors are discussed in further detail in Insperity’s filings with the U.S. Securities and Exchange Commission. 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.

Except to the extent otherwise required by federal securities law, we do not undertake any obligation to update our forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.

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