Small Business Optimism Index posts record fall

William Dunkelberg

A measure of optimism among small business owners posted the largest one-month drop in its 46-year history as the coronavirus outbreak affects their outlook for everything from the economy to sales to staffing.

“It’s hard to say what the severity of the disruption will be, but we know they’re feeling the urgency,” said William Dunkelberg, chief economist of the National Federation of Independent Business.

The NFIB reported its Small Business Optimism Index dropped 8.1 points to 96.4 in March as nine of 10 components of the index fell. The index is based on monthly surveys of members of the small business advocacy group, most of them small business owners.

Dunkelberg said survey results reflect a decrease in stock market indices. A record increase in unemployment claims was reported after the majority of the latest survey responses were received, however.

Financial assistance is crucial to helping small businesses survive the outbreak, he said. “It is vital that these businesses have access to federal funds that are made available through the CARES Act to keep the doors open on Main Street.”

The proportion of those who responded to the survey upon which the March index was based who expect the economy to improve fell 17 points to a net 5 percent. That’s the biggest decline since November 2012.

A net 21 percent of respondents reported plans to make capital improvements, down five points. A net 13 percent said they consider now a good time to expand, down 13 points.

The share of those who expect higher real sales dropped 31 points, the largest monthly decline in survey history. At a net negative 12 percent, more respondents expect lower sales than higher sales.

A net 9 percent reported plans to increase staffing, down 12 points. A net 35 percent reported hard-to-fill job openings, down three points.

The proportion of those reporting higher earnings fell two points. At a net negative 6 percent, more respondents reported lower than higher earnings.

The share of those who plan to increase inventories fell five points to a net negative 3 percent. At a net 2 percent, more respondents reported current inventories too high than too low.