Although June marked the second-year anniversary of the recovery, there was little to make small business owners optimistic.
National Federation of Independent Business' monthly Small-Business Optimism
Index dropped one tenth of a point in June, settling at 90.8, an "unsurprising"
reading, basically unchanged from the previous month and solidly in recession
territory. While some indicators rose slightly-including expected capital
outlays-pessimism about future business conditions and expected real sales
gains tugged the index down, causing a "small but disappointing" drop in the index
for the fourth consecutive month.
June marked the second-year anniversary of the recovery, it appears there was
little happening to make small business owners optimistic. Earnings trends for
small businesses remained "distressingly negative" in June, particularly given
that the recovery is now beginning its third year. According to the report, 69
percent of the owners view the current period as a poor time to expand and 75
percent of those blame the weak economy for their outlook, while 10 percent
cite political uncertainty.
owners are registering a vote of -no confidence' in the federal government,"
said NFIB chief economist Bill Dunkelberg. "Between the deluge of new
regulations and a Washington policy agenda that is largely ignorant of Main
Street needs, stubbornly low consumer spending, and grave concern among small
firms about the federal budget, there is not much to be optimistic about as a
small-business owner. Who can blame the prevalence of pessimism when
administration officials are telling Congress that small businesses need to pay
more in taxes to support government spending programs?"
June's employment growth was weak, 15 percent (seasonally adjusted) of small
firms reported unfilled job openings, a 3-point increase from May and an
indication that the unemployment rate will ease back below 9 percent in the
late summer or early fall. Over the next three months, 11 percent plan to
increase employment (down 2 points), and 7 percent plan to reduce their
workforce (down 1 point), yielding a seasonally adjusted 3 percent of owners
planning to create new jobs, and a 4-point improvement. "However, these
statistics are still at recession levels and any real employment gains are
still to be realized," the report noted.
credit remains a limited problem as it continues to affect a small percentage
of owners. Three percent of owners reported financing as their No. 1 business
problem, and 91 percent reported that all their credit needs were met or that
they were not interested in borrowing. Nine percent reported that not all of
their credit needs were satisfied, 53 percent said they did not want a loan and
13 percent did not answer the question and might be presumed to be uninterested
in borrowing as well.
the overwhelming majority of owners, 'credit supply' is not a problem," the
report said. "Twenty-nine percent of all owners reported borrowing on a regular
basis, unchanged from May and only 1 point above the record low."
Nathan Eddy is Associate Editor, Midmarket, at eWEEK.com. Before joining eWEEK.com, Nate was a writer with ChannelWeb and he served as an editor at FierceMarkets. He is a graduate of the Medill School of Journalism at Northwestern University.