Small business optimism index falls to eight-month low

A monthly measure of optimism among small business owners has dropped to its lowest level in eight months on less upbeat expectations for everything from capital outlays and hiring to sales and profits.

The National Federation of Independent Business reported that its Index of Small Business Optimism fell three points in June to 91.4. The decline pushes the index to its lowest level since October and erases gains from earlier this year.

The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group.

“All in all, this month’s survey was a real economic downer,” said William Dunkelberg, chief economist of the NFIB. “The economy has definitely slowed.

Job growth will be far short of that needed to reduce the unemployment rate unless lots of unemployed leave the labor force — no consolation. Taxes remain a top concern for the small business community.”

For June, nine of 10 components of the index retreated.

The proportion of small business owners responding to the survey upon which the June index was based who expect the economy to improve over the next six months fell eight points to a net negative 10 percent.

That means more owners expect the economy to deteriorate than to improve.

The share of owners planning capital outlays over the next three to six months fell three points to 21 percent. Just 5 percent of owners said they consider now a good time to expand, down two points from the previous month.

The proportion of owners planning to increase inventories declined two points to a net 0 percent.

The share of owners planning staff increases retreated three points to 3 percent, a leading indicator of what could be rising unemployment rates in coming months. Meanwhile, 15 percent of owners reported unfilled job openings, down five points.

The proportion of owners who expect sales volume to increase in coming months fell five points to a net negative 3 percent, bringing the decline over the past four months to 15 points. Meanwhile, 23 percent of owners cited weak sales as their top business problem.

Reports of positive earnings trends dropped seven points to a negative 22 percent.

 

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Posted by on Jul 10 2012. Filed under Business News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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