Small-business optimism “sighed” in July, with a monthly index that measures the optimism up 0.6 points for a reading of 94.1, according to the National Federation of Independent Business (NFIB), which released the index Aug. 13. The optimism index rose “marginally,” the NFIB said on its website. The latest report continues the “historically […]
Small-business optimism “sighed” in July, with a monthly index that measures the optimism up 0.6 points for a reading of 94.1, according to the National Federation of Independent Business (NFIB), which released the index Aug. 13.
The optimism index rose “marginally,” the NFIB said on its website.
The latest report continues the “historically weak” trend of owner confidence, which has led some observers to suggest the NFIB should rename the monthly survey the “Small Business Pessimism Index,” the organization said in a news release.
The NFIB, headquartered in Nashville, Tenn., advocates for the nation’s small businesses.
The two labor-market indicators remained weak, but both improved and are beginning to push into “normal” territory, according to the NFIB.
July was “another slow month for jobs” among NFIB’s 350,000 business owners, with the average increase in employment coming in at a negative 0.11 workers per firm, the third consecutive negative monthly reading.
Owners have stopped reducing employment, but they have not resumed hiring, the NFIB notes.
In addition, about 20 percent of all owners reported job openings they could not fill in the current period, which is up 1 point, and “a good omen” for the unemployment rate, the NFIB said.
Another 15 percent indicated their use of temporary workers, which is up 3 points from June.
The NFIB notes the federal health-care reform law, the Patient Protection and Affordable Care Act, provides incentives to increase the use of temporary and part-time workers. It also notes an increase of 360,000 part-time jobs in June, along with a loss of 240,000 full-time jobs.
Job creation plans rose two points to a net 9 percent planning to increase total employment, “the best reading” since August 2012, according to the NFIB.
But, overall, the data doesn’t indicate a lot of “promise” for new job growth, the organization said.
Uncertainty about the future remains “endemic” among job creators, with only nine percent of respondents believing that now is a good time to expand their businesses, the NFIB said.
The small-business community registered the fourth-highest optimism reading since December 2007, when the economy slipped into official recession, William Dunkelberg, NFIB chief economist, said in the news release.
He called it “an attempt to ‘make lemonade’ from the lousy bushel of lemons the administration has handed” the small-business community.
The level is still “well below” the average reading of 100 in the prior 35 years and still half a point below the December 2007 reading, Dunkelberg cautioned.
“Unfortunately, nothing is being done to allay the most pressing concerns identified by job creators, [which include] dealing with rising health-insurance costs, regulations, tax complexity, energy costs and general-economic uncertainty. The President wants a deal on ‘corporate taxes,’ but most small businesses are not incorporated. Energy policy is more confused than ever and the volume of new regulations is mounting. Should I even mention the mounting problems with Obamacare? We are in the ‘tankeroo,’ not sinking, but trying to stay afloat,” Dunkelberg said in the news release.
Additional indicators
The net percentage of all owners reporting higher-nominal sales in the past three months improved a point, rising to a negative 7 percent compared to the prior three months. The net percentage of owners expecting higher real sales volumes rose 2 points, to 7 percent of all owners.
These expectations remain “depressed” and are not the kind that will generate a lot of new employment or new orders for inventories, the NFIB said.
Reports of positive-earnings trends improved one point in July to a negative 22 percent, restoring them to May’s numbers. The index found four percent of owners reduced worker wages and 19 percent said they raised compensation, yielding a seasonally adjusted net 14 percent that reported higher worker wages, which is unchanged.
A net 11 percent have plans to raise employee wages in the coming months, which is up five points, according to the NFIB.
Credit remains a “non-issue” for small employers, five percent of whom say they weren’t satisfy all their credit needs in July, which unchanged from June and May, and the lowest reading since February 2008. The index found about 30 percent of owners surveyed met all their credit needs, and 52 percent explicitly said they did not want a loan. Add in the respondents who didn’t answer the question, and the index found a total of 65 percent that are not interested in borrowing, according to the NFIB.
The net percentage of owners expecting better business conditions in six months was a net negative 6 percent, two points worse than June’s reading, the NFIB said.
The report is based on the responses of 1,615 randomly sampled small businesses in NFIB’s membership, surveyed throughout the month of July.
Contact Reinhardt at ereinhardt@cnybj.com