NFIB: Small business optimism still limping along

A monthly measure of optimism among small business owners remains stuck at an historically low level that reflects continued uncertainty over economic conditions.

The National Federation of Independent Business reported that its Index of Small Business Optimism edged down a tenth of a point in May to 94.4.

“In the last year, small business optimism has limped along. And today, the sector is no better off than it was just over a year ago,” said William Dunkelberg, chief economist for the NFIB.

“The lack of progress is discouraging, producing no signs that economic activity will pick up this year at all,” Dunkelberg said. “The calculus of spending decisions requires an estimate of future sales, tax rates, interest rates and credit availability, labor costs, health care costs, regulatory compliance costs, all of which are very uncertain. Most of this uncertainty is the result of what is happening — and not happening — in Washington. Investments in jobs or plants and equipment are not the priority while people are still bracing for the worst.”

The index is based on the results of monthly surveys of members of the NFIB, a small business advocacy group based in Washington, D.C. For May, four out of 10 components of the index advanced, while four components retreated and two remained unchanged.

The proportion of small business owners responding to the survey upon which the May index was based who expect the economy to improve over the next six months rose three points, but remains at a net negative 2 percent. More owners expect the economy to deteriorate than improve.

The share of owners planning capital expenditures over the next three to six months slipped a point to 24 percent. Meanwhile, 7 percent of owners characterized now a good time to expand, unchanged from the previous month.

The proportion of owners planning to increase inventories rose two points to a net 2 percent.

The share of owners planning staffing increases edged up a point to 6 percent. That gain follows a five-point jump in April. At the same time, 20 percent of owners reported unfilled job openings, up three points. Overall, however, the latest numbers don’t signal a significant increase in job growth in the near future.

Sales are improving modestly with 2 percent of owners reporting higher nominal sales over the past three months, the second-highest reading in

60 months. A net 2 percent of owners expect sales volume to increase in coming months, down four points, and 20 percent of owners still cite poor sales as their top business problem.

 

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Posted by on Jun 12 2012. Filed under Business News, Trends. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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