A monthly measure of confidence among small business owners remains high on improving expectations for capital spending and sales.
The National Federation of Independent Business reported that its Small Business Optimism Index edged up a tenth of a point to 105.3 in August.
“This is a sign of economic health that we’ve been expecting based on the soaring optimism that began last year,” said Juanita Duggan, president and chief executive officer of the NFIB. “Higher optimism resulted first in higher employment activity, and now we’re seeing more small business owners making capital investments.”
Bill Dunkelberg, chief economist for the NFIB, agreed. “Small firms are now making long-term investments in new machines, equipment, facilities and technology, and it will be interesting to see if the August result becomes a trend.”
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, four of 10 components of the index advanced, while five retreated and one remained unchanged.
A net 32 percent of small business owners responding to the survey upon which the August index was based reported plans to increase capital spending over the next three to six months, a four-point gain to the highest level since 2006. A net 27 percent of owners said they consider now a good time to expand, also up four points.
Plans for capital spending were spread out among a number of industry sectors, including professional services, manufacturing, wholesale trades, agriculture and construction.
A net 37 percent of owners said they expect the economy to improve, unchanged from July.
A net 27 percent of owners said they expect higher sales, up five points. But at a negative net 11 percent, more owners reported lower earnings than higher earnings. That level slipped a point from July.
A net 18 percent of owners reported plans to increase staffing, down a point. A net 31 percent of owners reported hard-to-fill job openings, down four points.
A net 2 percent of owners reported plans to increase inventories, down three points. At a net negative 5 percent, more owners said current inventories were too high rather than too low.
Duggan said increased consumer demand has led to increased optimism among small business owners, but so has the expectation of regulatory relief. “Substantial regulatory relief is also a big factor because it creates a much more hospitable business climate.”