Small Business Optimism Flatlines in August

Contradictions abound in the latest survey of small-business optimism, as small-business owners plan to increase employment, despite lowered expectations regarding the economy and earnings. The latest Small Business Economic Trends survey from the National Federation of Independent Business shows that optimism was flat overall in August, decreasing just 0.1 points from July to 94.0. And yet, individual indicators measured by the organization suggest confusion over the future. “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,” says NFIB chief economist Bill Dunkelberg. Sixteen percent of small-business owners reported plans to increase employment, and 25% intend to make capital outlays. But at the same time, only 7% of business owners said it was a good time to expand, and a net -10% of survey respondents say they expect the economy to improve. Additionally, expectations regarding earnings trends fell 13 points. Dunkelberg suggests that a lack of clear leadership from government and the current regulatory climate are at the core of the confusion among small-business owners. Health-care deadlines are top of mind, and Dunkelberg says the hope for real tax reform is growing dim. “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,” says Dunkelberg. The NFIB surveyed 759 randomly selected small businesses in the organization’s membership during the month of August.