The National Federation of Independent Business (NFIB) reported that small business owner sentiment moved higher last month. The Small Business Optimism Index rose from 89.5 in March to 92.1 in April, its highest level in six months. As you might expect, an improved sales outlook helped to lift these figures, with the net percentage of respondents expecting higher sales increasing from -4 percent to +4 percent. In addition, small businesses appear to be more willing to increase hiring, as well, with the net percentage planning to hire in the next three months rising from zero in March to 6 percent in April.

This does not mean, however, that small businesses have moved beyond their challenges. Keep in mind that small businesses are said to be growing strongly when the Optimism Index exceeds 100, so we are still quite a way from that. Indeed, the net percentage of business owners saying that the next three months were a “good time to expand” was unchanged at four percent. As with past reports, the top reasons cited for it not being a good time to expand were economic uncertainties and the political climate. (continue reading…)

The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index edged slightly higher from 88.9 in February to 90.8 in February. This was the fourth consecutive monthly gain, having fallen from 93.1 in October to 87.5 in November.

Even with this modest progress, the index remains at sub-par levels, with index values over 100 historically signifying an expanding sector. Small business leaders remain anxious about the economy, even as there were some signs of improvement. In many ways, this mirrored the higher sentiment levels observed in yesterday’s release of the NAM/IndustryWeek Survey of Manufacturers.

The net percentage of those saying that the next three months are a “good time to expand” has fallen from 7 percent in October to 6 percent in January to 5 percent in February. This indicates that there continues to be some skittishness in the small business community about the future. Of those saying that the next three months were not a good time to expand, their top reason was the economy, cited by 40 percent of respondents. This was followed by concern about the political climate, mentioned by 15 percent.

Looking at the items were ranked as the “single most important problem,” there was a tie between taxes and government regulations, with each garnering 21 percent. This is identical to the readings last month, with small businesses bearing the brunt of higher taxes in the fiscal cliff deal and smaller firms continuing to worry about the overall regulatory burden of new federal rules. Poor sales – a proxy for economic conditions – were the next highest problem, cited by 18 percent of those taking the survey. (continue reading…)

The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index edged slightly higher in October, up from 92.8 in September to 93.1 in October. Even with the higher confidence level, small business owners remain anxious about the current economic environment. The net percentage of respondents saying that the next three months would be a good time to expand was unchanged at 7 percent. Of those saying that it was not a good time, the main reasons were economic conditions and the political climate. The latter answer is most likely a proxy for the election and the fiscal cliff.

Adding to these worries, small business sales have been moving in the wrong direction since June. The net percentage of owners reporting actual sales increases versus decreases has been negative since then, and it was -15 percent in October. In addition, earnings levels also remain weak, hiring intentions continue to be low, and firms’ ability to raise prices appears to be constrained. Just 22 percent of owners plan to make capital expenditures in the next three to six months.

Along these lines, the single most important problem – cited by 22 percent of respondents – was poor sales. This was followed closely by taxes (20 percent) and government regulations and red tape (19 percent). The inability of political leaders to solve the fiscal cliff is more than likely a major factor in both rising uncertainties regarding the future as well as the fact that “taxes” continue to be cited as one of the more pressing concerns.

In short, the NFIB survey provides us with a mixed bag of economic news as it pertains to small business owners. On the one hand, whether you compare to the last few months or last year, small business confidence has clearly risen. In October 2011, for instance, the Small Business Optimism Index stood at 90.2. Yet, it is also clear that owners remain anxious, with slowing sales and worries about the fiscal cliff. The Index was 94.5 just six months ago (April), and we remain well below the threshold of 100 which would indicate a growing small business sector.

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

In today’s USA Today NAM President and CEO Jay Timmons and NFIB President and CEO Dan Danner authored an op-ed about the uncertainty facing business owners in today’s difficult environment.

Recently Timmons and Danner released the results of a poll that showed that 55 percent of small businesses and manufacturers surveyed would not start a business today. That number was even higher for just manufacturers at 59 percent.

America’s job creators are facing too much uncertainty to expand and hire new workers. This is a result of the uncertainty from tax increases and costly regulations.

Excerpt from the op-ed:

Business owners make incredible sacrifices to pursue their dreams, and those sacrifices are amplified when times are tough. Manufacturers and other business owners are facing significant obstacles, but instead of policymakers helping to eliminate these roadblocks and improve the economic climate for all businesses, they are adding new regulations and contemplating tax increases. If we expect more people to take the enormous risks involved in starting a new business or inventing a new product, it’s critical that lawmakers put aside the partisan politics and address our economic uncertainty by focusing on policies that promote growth.

That’s why this election is so important. We can’t regain prosperity without leaders who understand that business, not government, is the engine that drives our economy. The risk-takers and innovators who will drive growth in the 21st century must know that our government will be their biggest champion, not their greatest obstacle.

Manufacturers want to lead and they need action from Washington to get the economy back on tracks and get Americans back to work.

The National Federation of Independent Business said that small business owner confidence was virtually unchanged in May. The Small Business Optimism Index edged slightly lower from 94.5 in April to 94.4 in May. The longer-term trend is more positive, as the index stood at 90.9 at this point last year. Still, small businesses remain concerned about the economy, with the index well-below the threshold of 100 which would suggest growth for the sector.

The net percentage of respondents saying that the next three months are a “good time to expand” was also unchanged at 7 percent, where it has stood for three consecutive months. For those saying that it was not a good time for expansion, the economy was the top concern, with political uncertainty also a factor. With that said, last month “poor sales” dropped from being the top concern for the first time since 2008 to second place. This top concern this month is “taxes,” perhaps a recognition of the expiration of tax cuts at the beginning of 2013. After taxes, the top concerns were sales and the regulatory environment.

The data points behind the index were mostly mixed. Expectations of sales, earnings and capital spending were lower. In contrast, it appears that small business owners are stepping up their hiring, with employment and job openings measures showing increases. Credit conditions remain an ongoing concern.

Chad Moutray is chief economist, National Association of Manufacturers.

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.

The National Federation of Independent Business released is monthly Small Business Economic Trends this morning, with Small Business Optimism rising from 92.0 in November to 93.8 in December. It was the fifth consecutive monthly gain, up from 88.1 in August.

Along with the gain in confidence, the net percentage of respondents saying that the next three months are a “good time to expand” has increased to 10, its highest level since before the recession. Likewise, small business owners are also more optimistic about future sales, employment and capital spending.

Nonetheless, it is important to note that small businesses remain anxious despite these improvements. Traditionally, small businesses are experiencing strong growth once the Optimism Index exceeds 100 – a threshold that it has not surpassed since 2006. Moreover, of those suggesting that now is not a good time for expansion, poor economic conditions and an unsettling political climate are cited. The single most important problem continues to be “poor sales” followed by taxes and government regulations.

Chad Moutray is chief economist, National Association of Manufacturers.

Small businesses became more pessimistic in August, according to the National Federation of Independent Business (NFIB). Their Small Business Optimism Index fell from 94.1 in January and 89.9 in July to 88.1 in August. This nearly matches where the index was one year ago.

Economic concerns were behind this decline, with 53 percent saying that the economy was not good and 13 percent noting economic uncertainty. The single most important problem continues to be poor sales, as cited by 25 percent of respondents. On the other hand, if one were to add together regulatory and tax concerns, this would top sales at 37 percent.

Small business owners on average expect sales to fall in the coming months. Twelve percent more of these owners see their sales falling than those who expect increases in the next three months. Likewise, more small businesses shrank employment than expanded it over the last three months. Looking ahead, a net 5 percent expect to hire, an improvement from July (which was a net +2 percent) but still not suggesting fast growth.

Meanwhile, the National Association of Business Economics (NABE) reported in its quarterly Outlook Survey that real GDP is expected to grow 1.7 percent this year, down from the earlier estimate of 2.8 percent made in May. Similarly, business economists foresee 2.3 percent growth in 2012 instead of 3.2 percent.

The reasons for the downgrade are multifaceted. First, the Bureau of Economic Analysis has reported much slower growth in the first half of this year than many economists expected (0.4 percent in the first quarter and 1 percent in the second). Second, businesses have faced a number of significant headwinds this year, from supply chain disruptions to rising raw material prices to falling business and consumer confidence. Growth in spending has been flat as a result. (continue reading…)

Despite some progress in overall economic conditions since the recess, small business owners remain anxious about the economy. These concerns have had real impacts on the smaller firms’ willingness to invest in their businesses, hire additional workers, or seek additional capital.

Given that smaller businesses have traditionally led economic growth coming out of a recession, the fact that this is not happening this time around is hampering employment and economic growth. Two recent surveys have highlighted this fact.

First, the U.S. Chamber of Commerce conducted it’s annual Small Business Outlook Survey. Nearly half of small businesses, defined as those with under $25 million in annual sales, felt that economic uncertainty was their top concern. Other top challenges included fiscal efforts to address the federal deficit and debt, government regulations and the Health Care law.

In addition, 64 percent intended to keep the same number of employees over the next year, with 19 percent planning additional hiring. Interestingly, despite negative views on the national economy, almost two-third report that their own businesses are “on the right track.”

Earlier today, the National Federation of Independent Business released its Small Business Optimism Index, which fell from 90.9 in May to 90.8 in June. While virtually the same as the previous month, the index reflects continued wariness on the part of small business owners. Over half of the respondents who suggested that the next six months were not a good time to expand, said that economic conditions were the reason. The top concern remains “poor sales.”

Chad Moutray is chief economist, National Association of Manufacturers.

The Census Bureau stated that retail sales fell 0.2 percent in May, its first decline since June 2010. The largest decliner was motor vehicle and parts sales, which dropped 2.9 percent from the previous month. Excluding autos, retail sales rose 0.3 percent. Even with these declines, however, it is important to note that retail sales were up 7.7 percent since May 2010, with auto sales up 5.4 percent over the past year.

Consumers continue to be pinched by rising prices. (Note that the consumer price index data for May will be released tomorrow.)  As a result, the weakness in spending went beyond automobiles. Other sectors with declining sales in May were electronics and appliances (down 1.3 percent), furniture and home furnishings (down 0.7 percent), food and beverages (down 0.5 percent), sporting goods and hobbies (down 0.4 percent), and general merchandisers (down 0.1 percent).

Bucking this trend, though, was strong growth in sales from nonstore retailers and building supply stores (both up 1.2 percent). Reflecting upward movement in energy prices, gasoline stations experienced a 0.3 percent increase in sales in May and a 22.3 percent rise year-over-year.

A second report released today shows that small businesses remain pessimistic about the economy – definitely not a good sign. The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index fell from 91.2 in April to 90.9 in May.

This was the third consecutive month of declines, with the index standing at 94.5 in February. Figures under 100 usually indicate weakness in the small business sector, and respondents appear to be hesitant to expand their businesses, hire new workers, and invest in new capital. The top concern remains poor sales, but perhaps reflecting inflationary pressures, 31 percent of respondents indicated the need to raise prices.

Overall, these two economic indicators reinforce the notion that the economy has weakened somewhat in the second quarter of 2011. Rising energy, food, and raw material prices continue to take their toll, but there are also other headwinds, both temporary and otherwise, which are serving as a drag on the economy. The NFIB survey is more pessimistic than other surveys, including ours, and there I remain cautiously optimistic about manufacturing output in the second half of 2011. 

Yet, these numbers are enough to remind us that economic growth remains tenuous, and for the manufacturing sector to continue to grow, we need to have the right economic and policy environment.

Chad Moutray is chief economist, National Association of Manufacturers.