NFIB: Small Business Optimism Remains Flat in August
The National Federation of Independent Business said its small business optimism index remained flat in August, dropping 0.1 points from July for a final reading of 94.0. While the total reading showed essentially no change over the month prior, a look at the individual indicators reveals incongruent details.
The NFIB said job creation plans leapt to a level not seen since before the recession and sales expectations improved; but this optimism would appear to contravene the dramatic deterioration in quarter to quarter sales and profit trends. The favorable employment plans also contrasted sharply with the increasingly negative expectations for improved general business conditions. The month’s performance proved poor, but expectations, pre-Syria, were looking up.
“August in Washington was typical – nothing got done, and therefore nothing changed the outlook of small business owners who have the same list of concerns today that they had in January, April and July,” said NFIB chief economist Bill Dunkelberg. “But we saw some interesting things happening with the Index this month. The August reading provided us with a rather perplexing set of statistics; internally consistent on some dimensions, such as lower sales bringing lower profits, but contradictory in other ways, such as lower job openings but huge gains in hiring plans. We know that the upcoming implementation deadlines for the healthcare law are weighing on the minds of employers, and the current dim prospects for real tax reform must be, as well. The September survey will hopefully straighten things but with Syria on the horizon, the budget situation still up in the air, and Obamacare being rolled out, clarity over our economic direction is not likely to be the outcome.”
Credit continues to be a non-issue for small employers, 7% of whom say that all their credit needs were not met in August, up 2 points from July. Twenty-nine percent of owners surveyed reported all credit needs met, and 49% explicitly said they did not want a loan (64% including those who did not answer the question, presumably uninterested in borrowing).
To download the full NFIB report click here.