The National Federation of Independent Business said that small business owners were slightly more optimistic in August. The Small Business Optimism Index rose from 91.2 in July to 92.9 in August. Even with the higher figure, the overall results were mixed.
The net percentage of respondents saying that the next three months are a “good time to expand” continues to fall, down from 10 percent in December to 5 percent in July to 4 percent in August. Economic and political concerns were the primary reason for this response. Sales and earnings data were also weak.
On the other hand, small businesses were more upbeat on their employment plans. The net percentage of owners saying that they plan to hire in the next three months rose from 5 percent to 10 percent for the month. It was zero as recently as March. This suggests that small firms plan to hire more workers in the coming months – a good sign. Capital expenditure plans were also higher.
The top concern for small business owners was taxes. This is almost certainly the result of rising anxieties regarding the fiscal cliff, with marginal tax rates expected to go up on January 1st unless the President and Congress act before then. It was cited by 23 percent of those taking the survey. This was followed by concerns related to government regulations (21 percent) and poor sales (20 percent). Poor sales had been the top concern in July.
Chad Moutray is chief economist, National Association of Manufacturers.