NFIB: Small Business Optimism Edged Marginally Higher in August

By September 8, 2015General

The National Federation of Independent Business (NFIB) said that optimism edged marginally higher in August, with sentiment still lower than seen earlier in the year. The Small Business Optimism Index rose from 95.4 in July to 95.9 in August, but remained down from 98.3 in May, its peak so far this year. Index values under 100 usually coincide with softer economic growth for small firms. This suggests that small business owners remain anxious about the economy. The percentage of respondents saying that the next three months were a “good time to expand” declined from 12 percent to 10 percent, with economic conditions and the political climate weighing heavily on the minds of those suggesting that it was not a good time for expansion. On the positive side, the headline index has averaged 96.5 year-to-date, up slightly from the 95.6 average observed in all of last year.

Sales expectations remained somewhat soft, which have likely held back the overall index. The net percentage of small businesses anticipating sales increases in the next three months increased from 6 percent to 7 percent, but that remained well below the 20 percent reading seen in December. The percent planning capital expenditures over the next three to six months was unchanged at 24 percent, with actual expenditures drifting lower in August (down from 61 percent to 58 percent). The hiring data were a bit more encouraging, however, with the net percentage planning to add workers in the next three months up from 12 percent to 13 percent. This figure rose for the second straight month, up from 9 percent in June to its second-highest level of the year. (January’s 14 was the highest.)

The top “single most important problem” was government regulations and “red tape”, cited by 21 percent of those taking the survey. This was followed by taxes (20 percent), poor sales (14 percent) and the quality of labor (14 percent). The poor sales component was up from 10 percent the month before.

Chad Moutray is the chief economist, National Association of Manufacturers. 

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), 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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