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.
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