A monthly index tracking optimism among small business owners has increased on a more upbeat outlook for the economy as well as plans to increase hiring and capital outlays.
The National Federation of Independent Business reported that its Small Business Optimism Index jumped 1.7 points in August to 92.9.
The index is based on the results of monthly surveys of members of the NFIB, a small business advocacy group based in Washington, D.C. The August index was based on the responses of 763 members who were surveyed at random.
“In spite of a terrible jobs report from the Labor Department and an increase in the number who view the current period as a terrible time to expand, small business owners continue to show their resilience,” said William Dunkelberg, chief economist for the NFIB. “Last month they were even a bit more optimistic about improvements in real sales volume and business conditions.”
Compared to the long-term average of 100 for the index, however, the August reading remains comparatively subdued, Dunkelberg added.
“It is possible that the uptick in their spirits will forecast the election outcome and the chance for a favorable resolution of our fiscal dilemma,” he said. “If election odds start changing, owners and consumers may change their minds about spending, hiring and saving. But for now, expect little change in the current course of the economy.”
For August, five of 10 components of the Small Business Optimism Index advanced, while three retreated and two held steady.
The proportion of small business owners responding to the survey upon which the August index was based who expect the economy to improve over the next six months jumped six points, but remains at a net negative 2 percent. That means more owners still expect the economy to worsen than improve.
The share of owners planning staff increases jumped five points to a net 10 percent. Meanwhile, 18 percent of owners reported hard-to-fill job openings, up three points.
The proportion of owners planning capital outlays over the next three to six months increased three points to 24 percent. Still, only 4 percent of owners said they consider now a good time to expand, down a point from July.
The share of owners planning to increase inventories remained unchanged at a net negative 1 percent.
The proportion of small business owners who expect sales volume to increase in coming months advanced five points to a net 1 percent, ending a 16-point slide over the previous five months. Poor sales remain the most-cited problem for owners, but has dropped from a record 33 percent in December to 20 percent in August.
Reports of positive earnings trends dropped another point to a net negative 28 percent.