NFIB Small Business Optimism Index Declines

Date: December 09, 2015

Below-Average Index Reading Highlights Less Positive Mood Of Some Small Business Owners

On Tuesday NFIB released its monthly Small Business Optimism Index results. For November, the survey of 601 US small business owners showed that optimism fell 1.3 points in November to a reading of 94.8. This follows a flat reading of 96.1 in October and small gains in September and August. NFIB Chief Economist William Dunkelberg said of the index results, “During this holiday season, small business owners are finding little to be hopeful or optimistic about including the economy in the New Year. This month’s Index continues to signal a lackluster economy and shows that the small business sector has no expansion energy whatsoever.” Dunkelberg further said, “Overall, the outlook remains the same with a slow 2 percent-ish growth and there is still not much pressure on prices from Main Street. All we can do at this point is hope for a more business friendly New Year.”

Reuters reported that six of the 10 components of the overall index fell in November. Among the components experiencing a decline was the share of small business owners anticipating stronger sales volumes for the next several months. That reading fell 5 points on the index. Dunkelberg said the latest survey results show, “With weak expectations for sales and business conditions, prospects for strong inventory investment are poor.” The number of small business owners believing it is currently a good time to increase expenditures also fell in the November survey. However, there was an increase in the number of small business owners reporting trouble finding the right people to fill open jobs. Additionally, more small businesses said they planned to boost worker compensation.

What This Means For Small Businesses

The latest survey indicates that small business owners’ optimism has taken a turn for the worse amid economic uncertainty created by a number of factors including a tightening labor market, inaction on interest rates, and the continued addition of burdensome government regulations. There is a long way to go to help small business owners feel great about the US business outlook, and this is particularly troubling as the holiday season is key for many small businesses.

Additional Reading

24/7 Wall Streetalso covered the NFIB survey.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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