Small Business Optimism Levels Off In July

Date: August 09, 2016

Latest NFIB Report Shows Optimism Barely Higher For Month As Labor Market Remains Tight

The latest NFIB Small Business Economic Trends report for July shows the Index of Small Business Optimism “rose one-tenth of a point in July to 94.6, a meager increase showing no real enthusiasm for expansion, expected sales, and making capital outlays.” According to NFIB, four of the index components saw gains, four declined, and two remained unchanged. Of the index components showing gains, the “outlook for business conditions in the next six months continued to improve, gaining 16 percentage points since January.” However, there are still more small business owners expecting business conditions to worsen than to improve. And, expectations for higher sales trends as well as earnings trends are worsening. Economic conditions, political climate, and difficulty finding qualified workers continue to be the most cited reasons for “why owners think the current period is a bad time to expand.” NFIB Chief Economist Bill Dunkelberg said, “Uncertainty is high, expectations for better business conditions are low, and future business investments look weak. Our data indicates that there is little hope for a surge in the small business sector anytime soon.” Fox Business reports that the slightly higher reading on the sentiment index indicates that “some owners see recently softer sales as temporary, though ongoing difficulty hiring and apprehension over business investment help explain why confidence remains below the longer-run trend.” For July, 53% of small business owners said they hired, or tried to hire, workers, but 46% of them “reported few or no qualified applicants.”

What This Means For Small Businesses

The latest NFIB Small Business Economic Trends report further details the struggles that small business owners have been facing in a post-recession world marred by a sluggish economy and burdensome regulatory environment. As NFIB President and CEO Juanita Duggan said, “Small business optimism has been absent for 89 out of the last 91 months. Without that optimism, small business owners will not invest, borrow, or create jobs. Small business owners need lower taxes and fewer government mandates and regulations in order to break out of this slump.”

Additional Reading

Morning Star, ForexLive, and Digital Look all reported on the monthly report.

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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