Survey: Small business owners less upbeat

A monthly measure of optimism among small business owners has dropped on less upbeat expectations for the economy, sales and earnings.

The National Federation of Independent Business reported that its Small Business Optimism Index fell 1.6 points to 95 in June.

The decline snapped a three-month string of increases that had pushed the index to its highest level since September 2007, although it remained below the average reading of 100 between 1973 and 2008.

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

Only two of 10 components of the index increased in June, while six components decreased and the remaining two held steady.

“The only two index components that increased in June were labor market indicators: the percent of owners with job openings and the percent planning to create new jobs in the coming months,” said Bill Dunkelberg, chief economist of the NFIB. “While reports of actual net job creation per firm were positive, consumer and business owner optimism remain low, with both spending growth and sales expectations weak.”

“With election day months away and no sign of change in Washington, economic growth for the rest of the year will continue to be sub-par,” Dunkelberg added.

The proportion of small business owners responding to the survey upon which the June index was based who expect the economy to improve dropped 10 points to a net negative 10 percent, meaning there were more pessimistic than optimistic responses.

A net 22 percent of owners said they plan to make capital outlays, down two points from May. A net 7 percent of owners said they consider now a good time to expand, down three points.

The share of owners who said they plan to increase staffing rose two points to a net 12 percent, the highest reading since 2007 and closer to what’s considered a normal level for a growing economy. Meanwhile, a net 26 percent of owners reported hard-to-fill job openings, up two points from a month ago.

The proportion of owners who expect increased sales fell four points to a net 11 percent. Just 13 percent of owners cited weak sales as their most pressing business problem, one of the lowest readings since December 2007.

The share of owners who plan to increase inventories fell two points to a net negative 1 percent. A net negative 2 percent of owners said they considered their current inventories too low, unchanged.

Reports of positive earnings trends slipped a point to a net negative 18 percent.