Small Business Optimism Index rebounds

William Dunkelberg

A measure of optimism among small business owners has rebounded on more upbeat expectations for sales and hiring, even in the midst of the coronavirus pandemic.

The National Federation of Independent Business reported its Small Business Optimism Index rose 6.2 points to 100.6 in June.

“Small businesses are navigating the various federal and state policies in order to reopen their business, and they are doing their best to adjust their business decisions accordingly,” said Bill Dunkelberg, chief economist of the NFIB. “We’re starting to see positive signs of increased consumer spending, but there is still much work to be done to get back to pre-crisis levels.”

The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners.

For June, eight of 10 components of the index advanced.

A net 13 percent of those who responded to the latest survey said they expect improving sales as more operations reopen and expand. That’s up 37 points from May and 55 points from a record-low net negative 42 percent in April. The gain in June accounted for more than half the increase in the overall index.

A net 16 percent of respondents said they plan to increase staffing, up eight points from May. A net 32 percent reported hard-to-fill job openings, up nine points. A net 19 percent cited finding qualified labor as their single most important problem. That proportion tied with taxes and ranked ahead of poor sales and government regulations.

The portion of survey participants who expect the economy to improve over the next six months rose five points to a net 39 percent.

A net 22 percent of participants reported plans to make capital outlays, up two points. A net 13 percent said they consider now a good time to expand, up eight points.

A net 7 percent reported plans to increase inventories, up five points from May and one of the highest readings historically. A net 1 percent said current inventories are too low, up six points.

Still, small business owners also reported declining earnings. The share of those reporting higher earnings fell nine points to a net negative 35 percent, the lowest level since March 2010. While 61 percent of owners cited weak sales, 9 percent blamed usual seasonal changes.