A monthly measure of confidence among small business owners continues to increase, but not at a pace that signals substantial growth in the sector.
The National Federation of Independent Business reported that its Index of Small Business Optimism rose seven-tenths of a point in June for a third straight month of gains. But at 94.5, the index remains below its 42-year average of 98.
“Uncertainty is high, expectations for better business conditions are low and future business investments look weak. Our data indicate that there will be no surge from the small business sector anytime soon, and prospects for economic growth are cloudy at best,” said Bill Dunkelberg, chief economist of the NFIB.
Juanita Duggan, president and chief executive officer of the NFIB, said government policies hinder small business growth. “To call the current economy an expansion is an absolute oxymoron,” Duggan said. “Fifty percent of GDP is small business. To grow the economy, policy makers need to get serious about tax reform, over-regulation and health care costs.”
The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners. For June, four of 10 components of the index advanced, while three retreated and three remained unchanged.
The proportion of NFIB members responding to the survey upon which the June index was based who expect the economy to improve rose four points. But at a net negative 9 percent, more members still anticipate worsening rather than improving conditions.
The share of members who reported plans to make capital outlays over the next three months rose three points to 26 percent. Meanwhile, 8 percent of members said they consider now a good time to expand, down a point.
A net 11 percent of members said they expect to increase staffing, also down a point. Meanwhile, 29 percent of members reported hard-to-fill job openings, up two points.
The proportion of members who said they plan to increase inventories fell two points to net negative 3 percent. The share of members who said current inventories remain too low held steady at a net negative 4 percent.
A net 2 percent of members said they expect increased sales, up a point. At a net negative 20 percent, more members reported profits were lower than higher quarter to quarter, unchanged from May.
The largest share of NFIB members responding to the survey cited taxes as their single most pressing business problem, followed by government regulations, quality of labor and poor sales.