Small Business Optimism: Slight Bump in August
The Presidential candidates Mitt Romney and President Obama are both pulling out all the stops with the election getting ever nearer. One of the main talking points between the two of them that we will likely see also brought up at the upcoming debates is small businesses. Both candidates will make the case that the opposition’s past actions and future proposals are the root of small businesses’ problems. Naturally, I would rather go get my information from reputable sources than politicians and that is why we will look at the National Federation of Independent Business’s (NFIB) latest report on small business optimism in America. Actually the report focuses on much more than just optimism as it looks at the broader scope of all economic trends currently impacting small businesses. The optimism index which gets the bulk of the media’s attention ticked up last month off of a 9-month low but it remains well below historical averages (see below).
Another benefit from the report is the ability to see the changes in the components that make up the index which individually represent a quick snapshot of small business owners future plans. From the report we found an uptick in plans to increase employment, and boost investment spending (see below). Further, sales expectations and the number of current jobs openings were all welcome positives.
Next we can see a list of what small businesses owners view as their most important issues and how they have changed from a year ago (see below). This should be the most important data set for politicians.
Earnings remain depressed (see below) and the NFIB continues from here, “Reports of positive earnings trends gave up one point, falling to a negative 28% in August after falling 12 points in June and July. Three percent reported reduced worker compensation and 17% reported raising compensation, yielding a seasonally adjusted net 13% reporting higher worker compensation (up 1 point). A net seasonally adjusted 10% plan to raise compensation in the coming months, up 2 points. Earnings are the major source of capital for small firms to finance growth and expansion. The past and promised increases in regulatory costs and in taxes will diminish the available financial support for growth as well as reduce the expected profitability associated with new investments in the business or new hires…”
Source - NFIB