The National Federation of Independent Businesses (NFIB) Small Business Optimism Index for September continued to reflect low expectations and pessimism in the small-business community. The index lost 0.1 points, falling to 92.8. The recession-level reading was pulled down by a deterioration in labor market indicators, with job creation plans plunging six points, job openings falling one point and more firms reporting decreases in employment than those reporting increases in employment.
“The election is just weeks away and essentially a horse race, and its outcomes would have vastly divergent policy implications,” says NFIB chief economist William Dunkelberg. “Everyone is waiting to see what happens, especially small-business owners who have a lot at stake in the outcome—which could mean higher marginal tax rates and more deficits, or lower marginal tax rates and less government. Small-business owners are reporting that the political climate is a reason not to expand—second only to the economy, which is only keeping up with population growth. And so, in the meantime, owners are in maintenance mode; spending only where necessary and not hiring, expanding or ordering more inventories until the future becomes more ‘certain.’”
The outlook for expansion did improve slightly; those who view the current period as a “good time to expand” gained three points, and the number of owners expecting business conditions to be better in six months gained four points, landing at a net two percent. While the readings are improved, they are still below historical averages.
There was almost no news for credit markets, where most owners reported no interest in a loan. Only eight percent complained that they didn’t get all the credit they wanted. Two percent say credit is their top business problem compared to 21 percent each citing taxes, regulations and red tape, and poor sales. Sales and profit trends were negative with little sign of improvement in the third quarter.
The NFIB’s report is based on the responses of 691 randomly sampled small businesses in its membership, surveyed throughout the month of September. Download the complete study here.