Little Change in Small Business Optimism

Of the 10 index components, the NFIB recorded gains in five. The reading in current and planned inventories was flat in September, while readings fell in three components. The largest drop came in expectations for improvement in the U.S. economy, where the change from August was down eight points. On the positive side, expectations for real sales rose three points.

Only 9% of small businesses now plan to increase hiring, leading the NFIB’s chief economist to say:

Between botched healthcare implementation and one manufactured crisis after another, consumers and small business owners are likely to remain pessimistic, accepting the notion that growth is going to be sub-par and that their government is likely to continue in dysfunctional mode for months to come.

The biggest drags on independent businesses, according to the survey, were regulations and red tape (noted by 22% of respondents), taxes (noted by 21% of respondents) and poor sales (noted by 18%).

Some 55% of small business owners reported making outlays for capital equipment in the past six months. That is up 2% from August. The number planning to make capital purchases in the next six months rose a point to 25%.

Another promising note was struck in the wages area. On a seasonally adjusted basis, a net 13% of small businesses plan to raise wages in the coming months. That could be due in part to the difficulty some businesses are having in hiring qualified employees. About 80% of business owners who were seeking to hire new employees reported few or no qualified applicants for their open positions. That means they have to — and are willing to — pay more to keep the employees they have.