Small-Business Optimism Falls in September: NFIB

 
 
By Nathan Eddy  |  Posted 2012-10-11 Email Print this article Print
 
 
 
 
 
 
 

With small businesses waiting for the outcome of the presidential election in November, owners are highly apprehensive of the future, according to an NFIB report.

With a highly competitive presidential election on the horizon, small-business owners are in standby mode until voters make their decision, although optimism among midmarket companies in September indicated another month of low expectations and pessimism, with the National Federation of Independent Businesses (NFIB) Small-Business Optimism Index losing 0.1 points and falling to 92.8.

Optimism took a hit due to a deterioration in labor market indicators, with job creation plans plunging 6 points, job openings falling 1 point and more firms reporting decreases in employment than those reporting increases in employment.

However, the outlook for expansion did improve slightly, although the report noted the readings still fell below historical averages. The percentage of survey respondents who viewed the current period as a “good time to expand” gained 3 points, and the number of owners expecting business conditions to be better in six months gained 4 points, landing at a net 2 percent, according to the report, which is based on the responses of 691 randomly sampled small businesses in NFIB’s membership.

“The election is just weeks away and essentially a horse race, and its outcomes would have vastly divergent policy implications,” NFIB Chief Economist William Dunkelberg said in a statement. “Everyone is waiting to see what happens, especially small-business owners who have a lot at stake in the outcome—which could mean higher marginal tax rates and more deficits, or lower marginal tax rates and less government. Small-business owners are reporting that the political climate is a reason not to expand—second only to the economy, which is only keeping up with population growth. And so, in the meantime, owners are in maintenance mode; spending only where necessary and not hiring, expanding or ordering more inventories until the future becomes more ‘certain.’”

Job creation plans indicated small-business owners created fewer jobs in September than in the two previous months, despite an overall reduction in the national unemployment rate. Seasonally adjusted, 10 percent of small-business owners reported adding an average of 2.2 workers per firm over the past few months, while 13 percent reduced employment an average of three workers, and the remaining 77 percent of owners made no net change in employment. However, slightly more than half (51 percent) of those surveyed said they hired or tried to hire new workers in the last three months, but 41 percent (80 percent of those trying to hire or hiring) reported few or no qualified applicants for open positions.

Small businesses are also being hampered by weak sales, according to the report, with 21 percent of survey respondents citing lackluster sales as their top business problem. Small-business owners are still in “maintenance mode,” when it comes to capital expenditures, with the frequency of reported capital outlays over the past six months falling 4 points to 51 percent, while the net percent of owners expecting better business conditions in six months rose 4 points to 2 percent after posting a 6-point improvement last month.

“There was almost no news for credit markets, where most owners reported no interest in a loan. Only 8 percent complained that they didn’t get all the credit they wanted,” the report noted. “Two percent say credit is their top business problem, compared to 21 percent each citing taxes, regulations and red tape, and poor sales. Sales and profit trends were negative with little sign of improvement in the third quarter.”

 
 
 
 
 
 
 
 
 
 
 
 
 

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