Small business optimism index continues retreat

A monthly measure of optimism among small business owners has declined for a fourth straight month as expectations for a substantial economic recovery dim.

The National Federation of Independent Business reported that its Small Business Optimism Index edged down a tenth in June to 90.8, a reading that reflects more recession than recovery.

Although June marked the second anniversary of the official end of the Great Recession, there’s little reason for small business owners to celebrate said Bill Dunkelberg, chief economist of the NFIB.

“Between the deluge of new regulations and a Washington policy agenda that is largely ignorant of Main Street needs, stubbornly low consumer spending and grave concern among small firms about the federal budget, there is not much to be optimistic about as a small business owner,” Dunkelberg said.

The index is based on the results of 766 survey responses from randomly selected small business owners who belong to the NFIB, a small business advocacy group based in Washington, D.C.

For June, four of 10 components of the index advanced, while three retreated and three remained unchanged.

The proportion of small business owners responding to the June survey who expect the economy to improve over the next six months fell six points to a net negative 11 percent.

While 50 percent of owners reported making capital outlays over the past six months, just 21 percent plan additional outlays over the next three to six months. The component rose a point from May, but remains at a recession level. Dunkelberg said credit is available, but most owners aren’t interesting in financing the purchase of equipment they don’t need.

Only 4 percent of owners said they consider now a good time to expand, down a point.

A net negative 3 percent of owners plan to increase inventories, unchanged from May.

A seasonally adjusted 15 percent of owners reported unfilled job openings, up three points from May and an indication the unemployment rate could ease in late summer or fall. Moreover, a seasonally adjusted net 3 percent of owners expect to increase staffing over the next three months, up four points from May.

The share of owners reporting higher sales over the past three months rose two points in June, but remains at a net negative 7 percent. Meanwhile, the proportion of owners expecting higher sales fell three points to a seasonally adjusted net 0 percent.

A seasonally adjusted net 10 percent of owners reported raising average sales prices over the past three months, down five points from May but still an indication of inflationary pressures.

Reports of positive earnings trends remained unchanged at a net negative 24 percent.

 

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