The NFIB Small Business Optimism Index rose 0.8 points in October to 94.9. Small business owners are rattled by uncertainty and unable to decide whether to expand, whether to hire, or whether to make other important decisions that might boost the economy, according to the NFIB Small Business Economic Trends Report.
Five of the 10 components posted a gain, three declined and two remained unchanged in October. Nearly half of the respondents cited taxes or regulations and red tape as their “Single Most Important Business Problem.”
“The data contained in this report shows record levels of uncertainty among small business owners, and it is tied directly to the election,” said NFIB President and CEO Juanita Duggan. “The result is economic inertia, with business owners unwilling to make the business decisions that would jumpstart the economy.”
Owners who expect better business conditions in the next six months fell seven points. Only nine percent of small business owners think that now is a good time to expand, up two points. Among owners who said that now is a bad time to expand, the political climate was the second most frequently cited reason.
Fifty-five percent reported hiring or trying to hire (down 3 points), but 48 percent reported few or no qualified applicants for the positions they were trying to fill. Twenty-eight percent of all owners reported job openings they could not fill in the current period, up 4 points. Fifteen percent reported using temporary workers, unchanged. A seasonally adjusted net 10 percent plan to create new jobs, unchanged from September. Job creation plans were strongest in manufacturing and professional services.
The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past 3 months compared to the prior 3 months deteriorated 1 percentage point to a net negative 7 percent. Seasonally adjusted, the net percent of owners expecting higher real sales volumes fell 3 points to a net 1 percent of owners. With weak sales prospects, hiring and inventory investment will likely be weak going forward.
Fifty-seven percent reported capital outlays, up 2 points from September, but trending down on a quarterly basis. The percent of owners planning capital outlays in the next 3 to 6 months was unchanged at 27 percent, the second highest reading in the recovery, but historically weak.
A seasonally adjusted net 25 percent of owners reported raising worker compensation, up 3 points. The net percent planning to increase compensation rose 5 points to 19 percent.