Small Businesses Become More Pessimistic in June

By July 10, 2012Economy

The National Federation of Independent Business said that small business owners were more pessimistic in June, falling to their lowest level since October. The Small Business Optimism Index fell from 94.4 in May to 91.4 in June.

The net percentage of respondents saying that the next three months are a “good time to expand” has declined from 10 in December to 5 in June. For the most part, small business owners remain anxious about the economic and political environment, as indicated by the reasons cited for their response on the expansion question. These findings are similar to what we saw in the NAM/IndustryWeek Survey.

Lower earnings were among the primary reasons for the lower readings in June. After seeing some improvements on the earnings in April, the net percentage of respondents saying that their earnings have risen has fallen since then.

Sales volumes have turned from a net positive to a net negative this month, with similar expectations for the next three months. “Poor sales” returned as the top concern for small business owners after a two-month reprieve, cited by 23 percent of respondents. This was followed by taxes (21 percent) and government regulations and red tape (19 percent).

Meanwhile, employment and capital spending expectations for the next three months remain positive but have eased somewhat. In short, these results show that entrepreneurs have become more concerned about the current and future economic environment, mirroring weaknesses seen in other economic indicators.

Chad Moutray is chief economist, National Association of Manufacturers.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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