Index: Small business optimism slides

William Dunkelberg
William Dunkelberg

A monthly measure of optimism among small business owners has retreated on less upbeat expectations for improving conditions, including sales and earnings.

The National Federation of Independent Business reported that its Small Business Optimism Index fell 1.3 points to 94.8 in November. The decrease is almost twice as large as the seven-tenths of a point increase over the previous three months and leaves the index well below its historical average of 98.

“During this holiday season, small  business owners are finding little to be hopeful or optimistic about, including the economy in the New Year,” said Bill Dunkelberg, chief economist of the NFIB. “This month’s index continues to signal a lackluster economy and shows that the small business sector has no expansion energy whatsoever.”

The outlook remains the same with growth in the 2 percent range and little pressure on higher prices, Dunkelberg said.

The index is based on the results of monthly surveys of members of the small business advocacy group, most of them business owners. For November, six of 10 components of the index retreated, while three remained unchanged and only one advanced.

The proportion of small business owners responding to the survey upon which the November index was based who expect the economy to improve fell three points to a net negative 7 percent, meaning more owners anticipate worsening than improving conditions.

The share of owners reporting plans to increase capital outlays over the next three to six months fell a point to 25 percent. Meanwhile, 12 percent of owners said they consider now a good time to expand, also down a point.

The proportion of owners who expect to increase inventories remained unchanged at an even 0 percent. The share of owners who deem existing inventories too low fell two points to a net negative 6 percent.

A net 11 percent of owners plan to increase staffing, unchanged from October. Meanwhile, 27 percent of owners reported hard-to-fill job openings, also unchanged.

The share of owners who said they expect higher sales fell five points to a net negative 1 percent.

While 21 percent of owners cited government regulations as the single most important problem facing their businesses, 20 percent of owners cited taxes, 15 percent cited difficulty in finding qualified workers and 10 percent cited the cost and availability of insurance.

The portion of small business owners reporting higher earnings fell three points. At a net negative 19 percent, more owners reported profits were lower quarter to quarter than higher.