NFIB Small Business Survey Sends Mixed Signals
WASHINGTON – Optimism among small-business owners remained flat in August, despite plans for job creation not seen since prior to the Great Recession, the National Federation of Independent Businesses reported in its most recent survey.
Small-business owners’ optimism was at 94.0 in August, down 0.1 points from July, according to the report.
“August in Washington was typical -- nothing got done, and therefore nothing changed the outlook of small-business owners who have the same list of concerns today that they had in January, April and July,” said Bill Dunkelberg, NFIB chief economist.
August provided “a rather perplexing set of statistics,” he said. The statistics were internally consistent in some respects, such as lower sales bringing lower profits, “but contradictory in other ways, such as lower job openings but huge gains in hiring plans,” he added.
“We know that the upcoming implementation deadlines for the health-care law are weighing on the minds of employers, and the current dim prospects for real tax reform must be, as well,” he said. “The September survey will hopefully straighten things but with Syria on the horizon, the budget situation still up in the air, and Obamacare being rolled out, clarity over our economic direction is not likely to be the outcome.”
The study, which can be downloaded here, is based on the responses of 759 randomly sampled small businesses in NFIB’s membership, surveyed throughout the month of August.
The August indicators show:
- Job Creation. August marked the fourth consecutive month of negative job growth for small-business owners. The average increase in employment for small firms surveyed was negative 0.3 workers per firm. Dramatic employment reductions have ceased but hiring has not resumed at normal levels.
- Hard to Fill Job Openings. According to the survey, 16% of all owners reported job openings they could not fill in the current period (down 4 points), and 9% reported using temporary workers, down 6 points from July. Most new jobs being created are likely to be in the part-time category.
- Sales. The net percent of all owners reporting higher nominal sales in the past three months compared to the prior three months plunged 17 points to a negative 24%, the second steepest monthly decline in survey history. The net percent of owners expecting higher real sales volumes surged 8 points, to 15% of all owners, a new high for this recovery period.
- Earnings and Wages. Earnings trends took a hit in August with the major softening in sales, falling 13 points to negative 35%. In the survey, 5% of owners reported reduced worker compensation and 21% reported raising compensation, yielding a seasonally adjusted net 15% reporting higher worker compensation (up 1 point). A net 12% plan to raise compensation in the coming months, up 1 point.
- Credit Markets. Credit continues to be a non-issue for small employers, 7% of whom say that all their credit needs were not met in August, up 2 points from July. Also, 29% of owners surveyed reported all credit needs met, and 49% explicitly said they did not want a loan (64% including those who did not answer the question, presumably uninterested in borrowing).
- Capital Outlays. In August, the frequency of reported capital outlays over the past six months rose 3 points to 57%. The percent of owners planning capital outlays in the next three to six months rose 2 points to 25%.
- Good Time to Expand. In August, only 7% characterized the current period as a good time to expand (down 2 points). The net percent of owners expecting better business conditions in six months was a net negative 10%, 4 points worse than July’s reading.
- Inventories. The pace of inventory reduction continued in August, with a net negative 11% of all owners reporting growth in inventories, 1 point down from July. For all firms, a net negative 1% (up 1 point) reported stocks too low, unchanged from July. Plans to add to inventories were up 3 points to a net 2%, in line with an improvement in expectations for sales growth.
- Inflation. According to the report, 17% of the NFIB owners surveyed reported reducing their average selling prices in the past three months (up 3 points), and 18% reported price increases (up 1 point). The net percent of owners raising average selling prices was 2%, down 2 points. As for prospective price increases, 21% plan on raising average prices in the next few months (up 5 points), and 3% plan reductions (unchanged). A net 20% plan price hikes, up 5 points.
SOURCE: NFIB.org
Published by The Business Journal, Youngstown, Ohio.
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