Small-business optimism treads water in January

Small-business owners boosted their hopes for future sales in January but cut back on their hiring plans, according to a monthly survey from the National Federation of Independent Business (NFIB).

That left January’s Small Business Optimism Index stalled at 93.9, just 0.1 point higher than December. The index has climbed for five consecutive months, yet still remains at a recession level, according to NFIB, which is a small-business association with members in Washington, D.C. and all 50 state capitals.

The index also lags below the level it registered in January 2011. At that time it was 94.1.

Business owners expect their sales to improve in the next three months, the index found. The seasonally adjusted net percentage of owners anticipating higher sales inched up one point to 10 percent.

Owners were not as optimistic when it came to hiring. Seasonally adjusted, a net 5 percent of survey respondents indicated they plan to increase hiring in the next three months. That is down one point from December.

The NFIB calculates net percentages by subtracting the percentage of optimistic survey answers it receives from the percentage of pessimistic answers. A positive net percentage indicates more survey responses were optimistic, while a negative net percentage indicates more responses were pessimistic.

New York director’s comments

Business owners in New York have expressed similar feelings to those in the NFIB’s survey, which is conducted nationally, according to Mike Durant, the organization’s New York State director.

“Tax rates in New York have stabilized, but the debate in Washington over higher taxes keeps raging on,” he said in a news release. “Until Washington gets its act together on taxes, regulations, and the federal debt, small-business owners in New York will remain cautious.”

Last year was a flat one for small-business optimism, according to the NFIB. And, January’s survey shows that the economy will likely continue to be weak, the organization said.

Other survey findings

Small-business owners ratcheted back their pessimism for business conditions in six months, the survey found. However, negative feelings were still predominant, with a seasonally adjusted net negative three percent predicting better business conditions in the future. That is five percent higher than in December.

A majority of owners indicated they plan to decrease their inventories in the next three to six months. Seasonally adjusted, a net negative three percent said they will boost inventories, which is down five percent from last month.

Poor sales remained the most common obstacle listed by business owners, with 22 percent naming sales as their top problem. That was down 1 point from the NFIB’s previous monthly survey.

And actual sales were negative in January, the survey found. The seasonally adjusted net percentage of owners reporting higher sales in the last three months than in the previous three months inched up one point to negative 6 percent. That indicator has been moving up since October but still shows more owners experiencing deteriorating sales than improving sales.

Reported earnings took a step in the wrong direction for business owners this month, with more stating that their earnings were lower in the previous three months than they had been in the three months before that. Seasonally adjusted, a net negative 24 percent of owners said sales were higher in the last three months than in the prior three months, a dip of 2 points from December.

The portion of small-business owners planning to make capital expenditures in the next three to six months remained unchanged from January at 24 percent. The percentage who reported actually making such outlays in the last six months dropped 1 point to 55 percent.

The NFIB randomly surveyed 2,155 of its members during the month of January to develop its optimism index.