Small business optimism ticks up on hiring outlook

A monthly index tracking optimism among small business owners has increased in part on more upbeat plans to increase staffing.

But the index also reflects ongoing uncertainty over taxes, regulations and the implementation of the federal health care law.

The National Federation of Independent Business reported that its Small Business Optimism Index increased nearly a point to 92.5 in November.

The latest reading remains well below the pre-recession average of 100 for the index as well as the levels typically recorded during a recovery, however.

The index is based on the results of monthly surveys of members of the small business advocacy group.

“The year is not ending on a high note in the small business sector of the economy. The bifurcation continues with the stock market hitting record levels, but the small business sector is showing little growth beyond that driven by population growth,” said Bill Dunkelberg, chief economist of the NFIB.

“There is also a hint that employers are getting an inkling of what Obamacare might mean for labor costs,” Dunkelberg added. “Concern about the cost and availability of insurance bumped up three percentage points after a long period of no real change.”

For November, eight of 10 components of the Small Business Optimism Index advanced, while two retreated.

The share 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 three points to a net negative 20 percent, meaning more owners anticipate worsening, rather than improving, conditions.

Nonetheless, the proportion of owners who plan to increase staffing rose four points to a net 9 percent. A net 23 percent of owners reported hard-to-fill job openings, up two points to the highest reading since January 2008.

The share of owners planning capital outlays over the next three to six months rose a point to a net 24 percent. A net 9 percent of owners characterized now as a good time to expand, up three points.

The proportion of owners planning to increase inventories exactly matched those planning decreases, while a net negative 4 percent of owners reported current inventories as too low.

A net 3 percent of owners said they anticipate higher sales, up a point. But the share of owners who expect higher earnings retreated a point to a net negative 24 percent.