Small business optimism mounts, but so do concerns

A monthly measure of confidence among small business owners has climbed to its one of its highest levels in nearly six years, yet continues to reflect concerns over government regulations and economic uncertainty.

The National Federation of Independent Business reported that its Small Business Optimism Index rose six-tenths of a point in July. At 94.1, the latest reading is the fourth highest since December 2007, when the United States economy officially slipped into Great Recession. Still, the index remains well below an average reading of 100 in the 35 years prior to the recession.

“Unfortunately, nothing is being done to allay the most pressing concerns identified by job creators — dealing with rising insurance costs, regulations, tax complexities, energy costs and general economy uncertainty,” said Bill Dunkelberg, chief economist of the NFIB. “The president wants a deal on corporate taxes, but most small businesses are not incorporated. Energy policy is more confused than ever, and the volume of new regulations is mounting.”

“We are in the tankeroo, not sinking, but trying to stay afloat,” Dunkelberg added.

The NFIB bases the Small Business Optimism Index on the results of monthly surveys of members of the small business advocacy group. For July, six of 10 components of the index advanced, two retreated and two remained unchanged.

The proportion of small business owners responding to the survey upon which the July index was based who expect the economy to improve over the next six months dropped two points. At a net negative 6 percent, the reading reflects more pessimistic than optimistic responses.

The share of owners planning capital outlays over the next three to six months held steady at 23 percent. Meanwhile, 9 percent of owners said they consider now a good time to expand, up two points over the last month.

A net negative 1 percent of owners plan to increase inventories, unchanged from June.

The reading for job growth rose two points with 9 percent of owners planning to increase staffing. At the same time, 20 percent of owners reported hard-to-fill job openings, up a point.

A net 11 percent of owners said they plan to increase wages in coming months, up five points.

The proportion of owners who expect higher sales volume increased two points. At just 7 percent, though, the latest reading isn’t expected to generate substantial new hiring or inventory purchases.

The share of owners who expect higher earnings edged up a point, but remained at a net negative 22 percent.

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Posted by on Aug 13 2013. Filed under 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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