A monthly measure of optimism among small business owners has tumbled to one of its lowest readings ever as concerns mount business conditions will worsen.
“Between the looming ‘fiscal cliff,’ higher health care costs and the endless onslaught of new regulations, owners have found themselves in a state of pessimism. We are forced to ask: Is this the new normal?” said Bill Dunkelberg, chief economist of the National Federation of Independent Business.
The NFIB reported that its Small Business Optimism Index dropped nearly six points in November to 87.5. The reading is the eighth lowest in the 37-year history of the index. All but one of the seven lower readings occurred during the depths of the Great Recession in 2008 and 2009. The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group.
Dunkelberg said the November reading reflects more than the effects of Hurricane Sandy because survey results from members in states hit by the storm were excluded for comparison. Rather, the survey reflects concerns over the results of the presidential election and fears business conditions will worsen, he said.
The share of small business owners responding to the survey upon which the November index was based who expect better business conditions in six months plummeted 37 points to a net negative 35 percent. While 49 percent of owners said they anticipate worsening conditions, 11 percent remained uncertain.
The proportion of owners who said they consider now a good time to expand slipped a point to 6 percent.
Out of 10 survey components, only two components increased in November.
The share of owners who plan to increase staffing edged up a point to 5 percent. Meanwhile, 17 percent of owners reported hard-to-fill job openings, also up a point.
Six of the remaining eight components either moved into or remained in negative territory.
The proportion of owners planning capital outlays over the next three to six months fell three points to 19 percent. The share of owners planning to increase inventories retreated four points to a net negative 5 percent, meaning more owners expect to cut back on inventories than add to them.
The proportion of small business owners who expect sales volume to increase in coming months retreated eight points to net negative 5 percent.
While 23 percent of owners reported weak sales as their most pressing business problem, another 23 percent cited taxes and 18 percent cited regulations.
Reports of positive earnings trends fell six points to a net negative 32 percent.