Small Business Outlook Improves Slightly

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The National Federation of Independent Business (NFIB) reported that its small business optimism index rose 1.7 points in August to 92.9. The most frequently cited issues for small business owners again in August were taxes (23%) and regulations (21%), topping sales (20%) as small business owners' most important problem.

The NFIB's chief economist said:

In spite of a terrible jobs report from the Labor Department and an increase in the number who view the current period as a terrible time to expand, small-business owners continue to show their resilience; last month they were even a bit more optimistic about improvements in real sales volumes and business conditions.

Small business owners did not add many new jobs in August - 78% reported no net change, while 12% reported adding an average of 2.7 employees and 10% reported cutting an average of 2.5 employees.

Fewer small business owners reported higher nominal sales, with 24% reporting higher sales and 29% reporting lower sales in August.

Citing the most recent University of Michigan/Reuters survey of consumer sentiment, the NFIB commented:

The survey shows only 12% of consumers think the government is doing a good job and 46% feel government is doing a bad job. And while the top ranked problem (out of 75) in the recently released NFIB Problems and Priorities survey was health insurance costs, the second and fourth ranked problems were "uncertainty about the economy" and "uncertainty about government policy." This goes a long way toward explaining why spending seems to be in "maintenance mode." With 50/50 odds in the polls, the president will be determined by the flip of a coin. The policy outcomes depending on who wins appear to be hugely different, and consequently, owners are not betting their hard earned money on the flip of a coin. They are waiting for more certainty about the direction of the economy and policy.

The NFIB press release is here and the full report is available here.

Paul Ausick


Filed under: 24/7 Wall St. Wire, business and finance, Research Tagged: featured
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