Small Business Optimism Index retreats

William Dunkelberg
Juanita Duggan

A monthly measure of optimism among small business owners has dropped as concerns about a possible recession contradict an otherwise strong economy.

“The pessimism we’re seeing is contagious even though the actual economy is thriving,” said William Dunkelberg, chief economist of the National Federation of Independent Business. “Expectations can be infected and, as a result, could turn sour.”

Juanita Duggan, president and chief executive officer of the NFIB, agreed. “In spite of the success we continue to see on Main Street, the manic predictions of recession are having a psychological effect and creating uncertainty for small business owners throughout the country.”

The NFIB reported its Small Business Optimism Index fell 1.6 points to 103.1 in August with six of 10 components of the index retreating.

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

A net 12 percent of small business owners responding to the survey upon which the August index was based said they expect the economy to improve, down eight points from July.

A net 28 percent of owners reported plans to make capital outlays, up a point. A net 26 percent of owners said they consider now a good time to expand, unchanged.

Expectations for sales were less upbeat. A net 17 percent of owners said they expect higher sales, down five points.

The proportion of owners who reported increased earnings rose three points. But at a net negative 1 percent, more owners reported lower earnings than higher earnings.

A net 20 percent of owners reported plans to increase staffing, down a point. A net 35 percent of owners reported hard-to-fill job openings, down four points. A record 27 percent of owners cited finding qualified workers as their single most important business problem.

A net 2 percent of owners reported plans to increase inventories, down a point. At a net negative 6 percent, more owners reported current inventories as too high rather than too low.