The National Federation of Independent Business (NFIB) Research Center released its “State of the States” SBET report, examining economic activity among Pennsylvania’s small businesses. The report shows that overall business metrics, namely the Optimism Index and Business Health, in Pennsylvania are mostly in line with those small businesses in the U.S. overall. Two indexes showed differences between the Commonwealth and the U.S.: the Employment Index and the Uncertainty Index, which both scored worse in Pennsylvania.

“It’s no surprise that employment and hiring are a top challenge for Pennsylvania’s small businesses, as outlined in this report,” said Greg Moreland, NFIB Pennsylvania State Director. “While Pennsylvania is mostly in line with the national numbers, there is still room for improvement to make the Commonwealth more business-friendly and strengthen our workforce.”

Pennsylvania’s Small Business Optimism Index

Pennsylvania’s Small Business Optimism Index came in identical to the U.S., both at 98.5 for the current period. This indicates decent conditions in both the Commonwealth and the country.

• One component of the Optimism Index, plans to make capital outlays, is significantly lower in Pennsylvania, ranking 6 points below the national average.

Business Health

Similar to the Optimism Index, the business health data show little difference between Pennsylvania and the U.S.

• One percentage point fewer businesses report “Excellent” health in Pennsylvania, but that is counterbalanced by 2 points fewer businesses reporting “Fair” health.
• Instead, 4 points more businesses report “Good” health.

Employment Index

NFIB’s new Employment Index incorporates 6 components related to hiring and compensation and turns them into a single number. A higher number means a tighter labor market where workers are harder to find and retain, and a lower number means a weaker labor market where hiring and retention are relatively easier.

The Pennsylvania Employment Index shows a weaker labor market than the U.S. overall, registering at 100.6 while the U.S. was 101.6.

• For most of the past five years, Pennsylvania has had a significantly lower Employment Index than the U.S. overall.

Uncertainty Index

In the most recent data, Pennsylvania’s Uncertainty Index has improved, falling more than 20 points. However, Pennsylvania’s level remains substantially higher than the U.S.’s 94.7 vs. 89.5.

• This continuously elevated uncertainty is particularly harmful for businesses seeking to make long-term investments and could explain why the capital outlays component was the lone significant underperformer among the Optimism Index components.

Single Most Important Business Problem

The top issue in Pennsylvania is taxes, which scores 4 points worse in the state than in the U.S.

• In contrast to taxes, there are two areas where Pennsylvania scores modestly better: poor sales and insurance, both of which were the top issue for 3 points fewer Pennsylvania small business owners than the U.S. ones.

View the full report here.