Uncertainty about the future remains endemic among job creators, with only 9 percent of small businesses feeling that now is a good time to expand their businesses, according to the latest survey from the National Federation of Independent Businesses (NFIB).
While the two labor market indicators remained weak, both improved and are beginning to push into "normal" territory. Small-business optimism slowed in July, with NFIB’s monthly Index increasing just over half a point (0.6) for a total reading of 94.1. July was another slow month for jobs among NFIB’s 350,000 owners, with the average increase in employment coming in at a negative 0.11 workers per firm, the third negative monthly reading in a row. Owners have stopped reducing employment, but they have not resumed hiring.
"In an attempt to ‘make lemonade’ from the lousy bushel of lemons the administration has handed the small-business community, owners gave the July optimism Index the great distinction of being the fourth highest reading since December 2007—when the economy slipped into official recession," NFIB chief economist Bill Dunkelberg said in a statement. "But let’s not get too excited: The level is still well below the average reading of 100 in the prior 35 years and still half a point below the December 2007 reading."
Credit continues to be a non-issue for small employers, 5 percent of whom say that all their credit needs were not met in July, unchanged from June and May, and the lowest reading since February 2008. Thirty percent of owners surveyed reported all credit needs met, and 52 percent explicitly said they did not want a loan (65 percent including those who did not answer the question, presumably uninterested in borrowing).
One-fifth (20 percent) of all owners reported job openings they could not fill in the current period (up 1 point), a potentially good omen for the unemployment rate, while 15 percent reported using temporary workers, up 3 points from June.
"Unfortunately, nothing is being done to allay the most pressing concerns identified by job creators—dealing with rising health insurance costs, regulations, tax complexity, energy costs and general economic uncertainty. The president wants a deal on ‘corporate taxes’, but most small businesses are not incorporated," Dunkelberg said. "Energy policy is more confused than ever and the volume of new regulations is mounting. Should I even mention the mounting problems with Obamacare? We are in the ‘tankeroo,’ not sinking, but trying to stay afloat."
In July, the frequency of reported capital outlays over the past six months fell 2 points to 54 percent, 7 points below the average spending rate through 2007. The percent of owners planning capital outlays in the next three to six months was, again, unchanged at 23 percent.