A measure of small-business owners’ optimism ticked up in August as employers indicated they plan to put up more help-wanted signs. The Small Business Optimism Index from the National Federation of Independent Business (NFIB) increased by 1.7 points to 92.9. The rise followed a 0.2 point dip in July. However, the index failed to rebound […]
A measure of small-business owners’ optimism ticked up in August as employers indicated they plan to put up more help-wanted signs.
The Small Business Optimism Index from the National Federation of Independent Business (NFIB) increased by 1.7 points to 92.9. The rise followed a 0.2 point dip in July.
However, the index failed to rebound to its highest point in 2012 — 94.5, which it registered in April. The August index is still a “solid recession reading,” according to the NFIB.
The month’s uptick in optimism came as small-business owners boosted their hiring plans. The seasonally adjusted net percentage of owners planning to hire in the next three months moved up 5 points to 10 percent.
The portion of business owners expecting higher sales during the next three months also rose 5 points. It broke out of negative territory, notching a seasonally adjusted net 1 percent.
That means more business owners now expect higher sales than predict lower sales. The NFIB calculates net percentages by subtracting pessimistic survey responses from optimistic responses, so positive net percentages reflect predominantly optimistic business owners. Negative percentages indicate widespread pessimism.
New York director’s comments
The findings in the Small Business Optimism Index, which is calculated from a national survey, hold true in New York but the election season brings uncertainty, according to the state’s NFIB director, Mike Durant. He believes the predominance of attack advertisements in this year’s campaigns affects business-owners’ outlooks.
“Business owners are very educated about the impact of public policy,” he says. “When the theme is politics, the public-policy discussion is flushed to the back. And that adds to the uncertainty of the future for entrepreneurs.”
Durant does not anticipate seeing major swings in the optimism index before the November elections.
“You’re not going to see anything until Election Day,” he says. “The political gridlock in Washington, D.C. and the elections in New York are going to have a lot to say about business owners’ trajectory going forward.”
Other survey findings
Three other optimism-index components increased in August. Plans to make capital expenditures in the next three to six months climbed 3 points. A seasonally adjusted 24 percent of business owners said they were preparing for such expenditures.
Small businesses reported an escalating number of hard-to-fill job openings. Seasonally adjusted, 18 percent of small employers said they had positions they were not able to fill, up 3 points from July.
And business owners tempered their pessimism on the economy’s future. The net percentage of owners expecting better general business conditions in six months stepped up 6 points to -2, seasonally adjusted. The negative reading continues to indicate more business owners anticipate worsening conditions, though.
Falling index components included expected credit conditions and earnings trends. The net percentage of regular borrowers expecting better credit conditions during the next three months dropped 2 points to -9 percent. The net percentage reporting higher earnings in the last three months compared to the prior three months eroded by 1 point to -28 percent, seasonally adjusted.
And the seasonally adjusted portion of owners who view this as a good time to expand slipped by 1 point as well. It fell to 4 percent.
The remaining two optimism-index components, which both deal with inventories, did not move in August. The seasonally adjusted net percentage of business owners satisfied with their inventories was unchanged at 0. The seasonally adjusted net percentage planning to increase their inventories in the next three to six months held steady at -1 percent.
Nearly a quarter of small-business owners, 23 percent, named taxes as their single most important problem. Another 21 percent cited government regulations and red tape, while 20 percent pointed to poor sales.
The NFIB is a nonprofit organization with members in 50 states and Washington, D.C. It randomly surveyed 736 of its member businesses in the month of August to develop the optimism index.
Contact Seltzer at rseltzer@cnybj.com