Turbulent reports are dampening business forecasts.
Small business owners should brace for choppy waters ahead if a new report is any indication.
The Thomson/Reuters PayNet Small Business Lending Index fell more than six points in April from March’s figure of 135.1. The index is closely associated with future gross domestic product, usually signaling what the GDP will look like in one or two quarters, according to Reuters. This latest drop could signal a “slower economy ahead” for small businesses, as PayNet President Bill Phelan told Reuters.
April’s index was also down 8 percent from 2015, marking the largest year-over-year decline since 2009, Monitor Daily reported. “Flatline best describes current small business investment activity,” Phelan told Monitordaily.
Is a Larger Trend Brewing?
These negative findings come on the heels of NFIB’s May Small Business Economic Trends report, which doesn’t offer much solace for business owners either.
Overall, small business optimism bumped up 0.2 points to 93.8, but that doesn’t mean all is well. Four out of 10 index components declined from the previous month, two were unchanged, and four posted gains. Among the most troublesome indicators: Negative earning trends for small businesses continued to drop, falling to a reading of minus 20.
Economic conditions, followed by an uncertain political climate, are the top two reasons why business owners don’t want to expand right now, according to the report.
“Almost every month the administration announces another big regulation that makes it harder to run a small business,” said NFIB President and CEO Juanita Duggan. “Mix in the presidential election and weak sales, and it’s easy to see why small business owners are reluctant.”