A monthly measurement of small-business owners’ optimism nationally stabilized in May, diminishing incrementally after registering ups and downs in April and March. The Small Business Optimism Index from the National Federation of Independent Business (NFIB) dipped one-tenth of a point in May. It registered 94.4, which is low by historical standards and matches slow growth […]
A monthly measurement of small-business owners’ optimism nationally stabilized in May, diminishing incrementally after registering ups and downs in April and March.
The Small Business Optimism Index from the National Federation of Independent Business (NFIB) dipped one-tenth of a point in May. It registered 94.4, which is low by historical standards and matches slow growth in employment and gross domestic product, according to the business organization.
May’s indication of relatively steady optimism levels comes after contrasting gains and losses over the last two months. The index fell 1.8 points in March, then rose 2 points in April.
Even so, small-business owners adjusted some of their views during May. They shifted their sales expectations downward while cutting back on negativity about the economy as a whole.
A seasonally adjusted net 2 percent of owners expected higher sales over the next three months, the NFIB found. That’s down 4 points from April, when a net 6 percent anticipated higher sales.
And a net negative 2 percent predicted better business conditions in six months, seasonally adjusted. Although the indicator is negative, it is up 3 points from April, when a net negative 5 percent of owners foresaw improving business conditions. The negative result indicates more business owners expect worse conditions than better conditions.
The NFIB calculates net percentages by subtracting pessimistic survey answers from optimistic answers. A positive net percentage indicates more optimistic business owners, but a negative percentage shows predominant pessimism.
New York director’s comments
Small-business owners in New York State are keeping their outlooks steady, according to NFIB New York State Director Mike Durant. Their feelings are similar to those reflected in the business organization’s optimism index, which is developed from a national survey, he adds.
“It’s great that they’re treading water, but at the same time you’re not going to move the needle very far when you have more regulations, a potential minimum-wage hike — all the things we’re seeing at a national and state level,” he says.
Even if New York’s legislative session expires this month without the passage of a minimum-wage increase, which many business owners fear, fall elections are breeding uncertainty, Durant says.
“They’re keeping one eye on Washington, D.C. and the fogginess that exists there with the presidential election,” he says. “They’re playing wait-and-see.”
Other survey findings
Hiring plans edged up 1 point in May, the NFIB’s national survey found. A seasonally adjusted net 6 percent of small-business owners said they planned to increase hiring in the next three months.
Hard-to-fill job openings also increased. Seasonally adjusted, 20 percent of owners reported having positions they were unable to fill, an increase of 3 points from April.
And plans to boost inventories rose. A seasonally adjusted net 2 percent of business owners indicated they wanted to increase inventories in three to six months, up 2 points from 0 in April.
But business owners were satisfied with their current inventory levels. The seasonally adjusted net percent of owners who said their inventories were too low was unchanged from April at 0. Also unchanged was the portion of business owners who rated the next three months as a good time to expand. It slotted in at a seasonally adjusted 7 percent for the third straight month.
Plans to make capital outlays receded 1 point. Seasonally adjusted, 24 percent of business owners planned capital expenditures in the next three to six months.
Expectations for credit conditions lowered as well, slipping 2 points in May. A net negative 10 percent of regular borrowers expected borrowing to become easier over the next three months. In other words, most business owners thought borrowing will become more difficult.
Finally, earnings took a hit, as a seasonally adjusted net negative 15 percent of business owners reported their earnings were higher in the last three months when compared to the prior three months. The result was down 3 points from April and indicates most business owners experienced worsening earnings.
Taxes claimed the top spot as the single most-important problem cited by business owners. In May, 22 percent said taxes were their single biggest problem. They were followed closely by poor sales, cited by 20 percent, and government regulations and red tape, which was named by 19 percent.
The NFIB, a nonprofit organization representing members in all 50 states and Washington, D.C., calculated the Small Business Optimism Index after surveying 681 of its members in May.