The National Federation of Independent Business’ widely-watched Small Business Optimism Index dropped 1.3 points last month to 94.8 with only one of the index’s 10 benchmarks showing any improvement from the month before.
State-specific data isn’t available, but Tom Underwood, state director of NFIB/Kentucky, the state’s leading small-business association, said attitudes here reflect the national trend. “Small businesses are doing better than they were a year ago, but they don’t have a lot of faith that the recovery is going to last,” he said. “If anything, there’s a sense that things are going to get worse before they get better.”
NFIB Chief Economist William Dunkelberg said, “During this holiday season, small business owners are finding little to be hopeful or optimistic about including the economy in the New Year This month’s Index continues to signal a lackluster economy and shows that the small business sector has no expansion energy whatsoever.”
Six of the ten Indices fell during the month of November while one posted a small gain and three went unchanged.
The 1.3 drop in small business optimism to 94.8 continues to be well below the 42 year average of 98.
Most of the Small Business Optimism Index loss was a result of the growing pessimism about business conditions in the United States over the next six months and diminished expectations about real sales growth. According to the survey:
Inventories are looking more excessive and earnings trends turned south.
The labor market indicators were unchanged and historically respectable.
Growth in the fourth quarter is likely to come in between 2 and 2.5 percent and employment growth will remain around 200,000 a month.
“Uncertainty in DC, federal agencies playing politics and a president that is willing to punish the current economy for inconsequential environmental benefits in the future indicates that business conditions will not be revived anytime soon,” Dunkelberg said. “Even though there is talk that the Fed will be raising rates this month, it will hardly signal that they are feeling more optimistic about the economy.
“Overall, the outlook remains the same with a slow 2 percent-ish growth and there is still not much pressure on prices from Main Street,” Dunkelberg said. “All we can do at this point is hope for a more business friendly New Year.”
The November survey was based on a random sample of 601 NFIB members.
For more information, please visit www.NFIB.com.