Small Business Optimism Index reflects mixed outlook

A monthly measure of optimism among small business owners has advanced, but reflects mixed expectations for business conditions, hiring and sales.

The National Federation of Independent Business reported that its Small Business Optimism Index rose four-tenths of a point to 95.2 in December. The index remains below its historical average of 98.

The index is based on the results of monthly surveys of members of the small business advocacy group, most of them business owners. For November, six of 10 components of the index increased, while three decreased and one remained unchanged.

The proportion of small business owners responding to the survey upon which the November index was based who expect the economy to improve over the next six months fell seven points to a net negative 14 percent, meaning more owners anticipate worsening than improving conditions.

The share of owners reporting plans to increase capital outlays over the next three to six months rose a point to 26 percent. But only 9 percent of owners said they consider now a good time to expand, down three points.

The proportion of owners who expect to increase inventories remained unchanged at an even 0 percent. The share of owners who deem existing inventories too low rose a point to a net negative 5 percent.

A net 15 percent of owners plan to increase staffing, up four points from November. Meanwhile, 28 percent of owners reported hard-to-fill job openings, up a point..

The share of owners who said they expect higher sales jumped nine points to a net 8 percent — the highest reading in eight months, but below the average reading of 14 in the first four months of 2015.

Meanwhile, 11 percent of owners cited weak sales as their most pressing business problem, up two points.

The portion of small business owners reporting higher earnings rose a point. But at a net negative 18 percent, more owners reported profits were lower quarter to quarter than higher.