Index: Small business optimism retreats

William Dunkelberg

A monthly index tracking optimism among small business owners nationwide has retreated on less upbeat expectations for sales and earnings.

The National Federation of Independent Business reported that its Small Business Optimism Index fell nearly a point to 93.5 in June.

“After two months of incremental, but solid, gains, the index gave up in June,” said Bill Dunkelberg, the chief economist of the NFIB. “This appears par for the course given that there is no reason for small employers to be more optimistic and lots of things to worry about.”

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

The latest reading for the index remains 12 points higher than the lowest reading during the Great Recession, but seven points below the average before the recession.

For June, six of 10 components of the index decreased, while two increased and two held steady.

The proportion of small business owners participating in the survey upon which the June index was based who expect the economy to improve over the next six months rose a point, but remained at a net negative 4 percent with more pessimistic than optimistic responses.

The share of owners planing capital outlays over the next three to six months held steady at 23 percent. But just 7 percent of owners said they consider now a good time to expand, down a point.

A net negative 1 percent of owners plan to increase inventories, down four points.

The reading for job growth rose two points with 7 percent of owners planning to increase staffing. Meanwhile, 19 percent of owners reported hard-to-fill job openings, unchanged from last month.

The proportion of owners who expect higher sales volume fell three points to 5 percent.

The share of owners who expect higher earnings dipped a point to a net negative 23 percent.

Asked to identify their most pressing business problems, 20 percent of owners cited taxes, regulations and red tape. Another 18 percent  cited weak sales.