Members of the small-business community didn’t get their hopes up much at the end of the year. The Small Business Optimism Index from the National Federation of Independent Business (NFIB) rose half a point in December to 88. The move wasn’t enough to recover from a 5.6-point drop in November, and the index posted its […]
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Members of the small-business community didn’t get their hopes up much at the end of the year.
The Small Business Optimism Index from the National Federation of Independent Business (NFIB) rose half a point in December to 88. The move wasn’t enough to recover from a 5.6-point drop in November, and the index posted its second-lowest reading since March of 2010.
In December, the index remained grounded even as six out of its 10 components increased. Their gains were muted by three components that fell and another that didn’t change from the previous month.
Hiring plans played a big part in curtailing the overall measurement of optimism. They tumbled 4 points, leaving a net 1 percent of business owners who said they planned to hire in the next three months, seasonally adjusted. Meanwhile, hard-to-fill job openings remained essentially flat by dropping 1 point, resulting in a seasonally adjusted 16 percent of owners with positions for which they could find no qualified candidates.
Regular borrowers anticipated slightly worse credit conditions in the next three months, as the net percentage of borrowers predicting easier loans fell 1 point to -11. That component was joined in negative territory by the net percentage of business owners who said general business conditions would be better in six months. It didn’t change from November, staying below zero at -35 percent, seasonally adjusted.
Those negative readings show more business owners predicting worse conditions than better conditions, because the NFIB calculates net percentages by subtracting pessimistic survey responses from optimistic ones. Conversely, any above-zero net readings mean more business owners expressed positive feelings.
New York director’s comments
Brinkmanship over the federal fiscal cliff didn’t help small-business owners in December, says NFIB New York Director Mike Durant.
“We’ll see in the next optimism reading what impact it has, if it moves the needle at all,” he says. “I don’t know if there’s necessarily an end in sight. You’re going from one high-emotion, high-impact public-policy debate to another, because now you’ve got the debt ceiling coming up. It impacts these small businesses at an enormous level.”
Other survey findings
Sales expectations and earnings made the largest jumps among those optimism-index components that increased in December.
The net percentage of business owners predicting higher sales in the next three months swelled 3 points, but remained below zero at -2, seasonally adjusted. The net percentage of owners reporting higher earnings in the last three months compared to the prior three months also moved up 3 points to -29, seasonally adjusted.
Plans to make capital expenditures ticked 1 point higher. Seasonally adjusted, 20 percent of business owners relayed plans to make a capital expenditure in the next three to six months.
On a similar note, business owners were increasingly open to expansion. The portion viewing the next three months as a good time to expand climbed 2 points to 8 percent, seasonally adjusted.
Business owners indicated they were happy with their current inventory sizes, as the net percentage of owners calling their inventories too large crept up 2 points to 0, seasonally adjusted. Plans to increase inventories were scarce, with the seasonally adjusted net percentage of owners expecting to increase their inventories in three to six months inching up 1 point to -4, indicating owners actually planned cuts.
Poor sales fell out of a tie with taxes as the top problem most often cited by business owners. In December, 23 percent of owners said taxes were their single most important problem, followed by government requirements and red tape, named by 21 percent of owners. Poor sales slipped to third, with 19 percent of owners naming poor sales as their most important problem.
The NFIB, a nonprofit organization based in Washington, D.C. with members in all 50 states and DC, randomly surveyed 648 of its members in December to develop its national optimism index. It released the index for December on Jan. 8.
Contact Seltzer at rseltzer@cnybj.com