Wells Fargo & Co. announced third quarter results for its Wells Fargo/Gallup Small Business Index that showed small business owners’ optimism holding steady at zero - neither optimistic nor pessimistic – as confidence expressed about present financial situation wasn’t enough to offset lower expectations for future revenues and capital spending allocation.

Earlier this month, Wells Fargo, together with Gallup, surveyed small business owners across the nation to gauge their perceptions of their present situation (past 12 months) and future expectations (next 12 months) in six key areas: financial situation, cash flow, revenues, capital spending allocation, hiring and credit availability.

“Business owners are demonstrating a reluctance to invest in their businesses and are holding onto cash,” said Doug Case, Wells Fargo small business segment manager. “In recent months, we’ve seen strong growth in deposit balances as business owners prepare for potential business challenges and save for future opportunities.”

The third quarter Index score included improvements in sentiment regarding small business owners’ financial situation, cash flows, hiring and credit availability over the past 12 months, leading to a four-point improvement in the survey’s “present situation” from negative 14 (-14) to negative 10 (-10)—a survey metric that has been in negative territory since the first quarter of 2009. Offsetting the quarter’s improvement were significant declines in expectations for revenues and capital spending over the next 12 months. All six measures of the Index showed declines in the future expectations component of the Index, which fell four points to 10 this quarter.

“Sales and demand clearly remain challenged,” said Dr. Scott Anderson, Wells Fargo senior economist. “Rising inflation and gasoline prices combined with renewed weakness in U.S. job creation has undermined consumer confidence and their ability to spend.”

The following key measures served as main drivers of the Index score during this survey period:

Present Situation (past 12 months)

- Financial Situation – 53 percent rated their present financial situation as somewhat or very good, up from 47 percent in Q2 2011. 28 percent rated their present financial situation as somewhat or very poor, down from 33 percent in Q2 2011

- Cash Flow – 42 percent rated their present cash flows as somewhat or very good, up from 38 percent. 34 percent rated their present cash flows as very or somewhat poor, down from 38 percent

- Hiring – 14 percent rated that the number of jobs or positions at their company increased a lot or a little, up from 10 percent in Q2 2011.

- Credit Availability – 34 percent rated that it was somewhat or very difficult to obtain credit, up from 30 percent in Q2 2011.

Future Expectations (next 12 months)

- Revenues – 42 percent expect their company’s revenues to increase a little or a lot, down from 49 percent in Q2 2011

- Capital Spending – 21 percent expect the amount of money they allocate towards capital spending to increase a little or a lot, down from 26 percent in Q2 2011