Small business confidence index reflects mixed results

A monthly measure of optimism among small business owners has rebounded on more upbeat expectations for capital spending and increased sales, but also reflects ambivalence.

“Those were two bright spots in an otherwise mixed reading,” said Bill Dunkelberg, chief economist for the National Federation of Independent Business.

William Dunkelberg
William Dunkelberg

The NFIB reported that its Small Business Optimism Index increased eight-tenths of a point to 96.1 in October. The gain offset an identical drop in September, although the latest reading remains nearly four points below the prerecession average for the index.

The NFIB bases the index on the results of monthly surveys of small business owners who belong to the group. For October, six of 10 components of the index advanced, while four retreated.

“They’re making capital investments and trying to fill positions despite that they cannot anticipate a better economy,” Dunkelberg said. “Basically, they’re preparing to taxi the runway, but they don’t expect to take off anytime soon.”

The proportion of small business owners responding to the survey upon which the October index was based who expect the economy to improve fell a point. At a net negative 3 percent, there were more pessimistic than optimistic responses.

Meanwhile, the share of owners who said they plan to make capital expenses jumped four points to a net 26 percent, the second highest reading since early 2008. The share of owners who plan to increase inventories edged up a point to a net 3 percent. Still, the proportion of owners who said they consider now a good time to expand fell two points to a net 11 percent.

The share of owners who said they plan to increase staffing rose a point to a net 10 percent. A net 24 percent of owners reported hard-to-fill job openings, up three points.

The proportion of owners who expect increased sales advanced four points to a net 9 percent. Still, 12 percent of owners cited poor sales as their most pressing business problem, the third most-cited problem behind government regulations at 22 percent and taxes at 21 percent.

Reports of positive earnings trends slipped a point to a net negative 20 percent.