The National Federation of Independent Business said that small business owner confidence was virtually unchanged in January from December. Its Small Business Optimism Index rose from 93.8 to 93.9 for the month. Traditionally, the sector is said to be expanding when the index is 100 or greater. Still, this represents an improvement from its 88.1 reading of August.
The net percentage of respondents saying that the next three months are a “good time to expand” fell from 10 percent to 9 percent. The top concern for those replying that now was not a good time to expand was the economy, followed by the political climate. But, it is important to keep these comments in perspective. As with past surveys, poor sales remains the “single most important problem” facing small business owners, with 22 percent giving this answer. That response, though, is below the 27 percent who said so last year, suggesting some improvement. (The second most important problem is government regulations and red tape, cited by 20 percent of respondents.)
Some of the indicators in the survey point to increased optimism, even if the overall figures remain subpar overall. For instance, the net percentage of those expecting greater sales in the next three months rose to 10 percent, up from -12 percent in August and 9 percent in December. Employment and capital spending plans are also positive, but job growth is expected to be modest.
One of the larger challenges for some small firms has been with access to credit. This survey finds some improvements on credit availability, but is also suggests continued difficulties for some.
Chad Moutray is chief economist, National Association of Manufacturers.
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