A measure of optimism among small business owners has increased on more upbeat expectations for earnings, staffing and inventories.
Small businesses continue to struggle, however, in the midst of the coronavirus pandemic and related closures, said Bill Dunkelberg, chief economist of the National Federation of Independent Business.
“Small businesses are working hard to recover from the state shutdowns and effects of COVID-19,” Dunkelberg said. “We are seeing areas of improvement in the small business economy as job openings and plans to hire are increasing. But many small businesses are still struggling and are uncertain about what the future will hold.”
The NFIB reported its Small Business Optimism Index rose 1.4 to 100.2 in August. The latest reading is slightly higher than the historical average of 100 for the 46-year-old index.
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 August, seven of 10 components of the index advanced, while two retreated and one remained unchanged.
The proportion of those responding to the survey upon which the August index was based who reported higher earnings rose seven points from July. But at a net negative 25 percent, more still reported lower than higher earnings. Among those reporting higher profits, 65 percent credited sales volume. Among those reporting lower profits, 55 percent blamed weak sales.
A net 3 percent said they expect higher sales, down two points.
A net 21 percent of respondents reported plans to increase staffing, up three points. A net 33 percent reported at least one unfilled job opening, also up three points. At the same time, 21 percent cited finding qualified labor as their top business problem. In the building industry, 41 percent said the unavailability of workers has slowed new home construction.
A net 6 percent reported plans to increase inventories, up two points. A net 3 percent said current inventories were too low, also up two points.
A net 24 percent said they expect the economy to improve over the next six months, down a point.
A net 26 percent reported plans for capital outlays, unchanged. A net 12 percent said they consider now a good time to expand, up a point.