Index: Small business optimism below average

William Dunkelberg
William Dunkelberg

A monthly measure of confidence among small business owners remains stuck at a below-average level.

The National Federation of Independent Business reported that its Small Business Optimism Index held steady at 96.1 in October. The index has gained only seven-tenths of a point over the past three months.

The index is based on the results of monthly surveys of members of the small business advocacy group, most of them small business owners.

“The October NFIB survey gave no indication of a resurgence in growth in the small business sector with the index remaining below the 42-year average of 98,” said Bill Dunkelberg, chief economist for the NFIB. “The labor market components might have held at historically strong levels. But this time owners reported no net growth in employment, which is a significant drop from reports in the previous four months.”

For October, five of 10 components of the index advanced, while three components retreated and two components remained unchanged.

The proportion of small business owners responding to the survey upon which the October index was based who said they expect the economy to improve held steady at a net negative 4 percent, meaning more owners anticipated worsening than improving conditions.

The share of owners reporting plans to increase capital outlays over the next three to six months rose a point to 26 percent. Meanwhile, 13 percent of owners said they consider now a good time to expand, also up a point.

The proportion of owners who said they expect to increase inventories fell three points to 0, which could affect overall economic growth in the United States. The share of owners who said their existing inventories are too low rose a point, but only to a net negative 4 percent.

A net 11 percent of owners reported plans to increase staffing, down a point. Meanwhile, 27 percent of owners reported hard-to-fill job openings, unchanged.

The share of owners who said they expect higher sales jumped three points to a net 4 percent.

While 13 percent of owners cited difficulty in finding qualified workers as the most important problem facing their businesses,
12 percent of owners cited poor sales as their most pressing problem. Government regulations and taxes remained the most cited problems.

The portion of small business owners reporting higher earnings fell three points. At a net negative 16 percent, more owners reported profits were lower quarter to quarter than higher.