The negatives weigh down the positives in the October Small Business Confidence Index released today by the National Federation of Independent Business. The Index edged up 1.3 points to 90.2, below the year-to-date average of 91.1 and only slightly better than the average since January 2009 of 89.1.
The minor uptick in small business confidence was held in check by negative owner sentiment, the NFIB said in a statement. “Consumer sentiment remains at very low levels,” said NFIB Chief Economist Bill Dunkelberg. ”There is no exuberance in spending, as consumers ‘make do’ rather than spend their increased savings in upgrades or new purchases. It’s that extra spending that would provide small business owners a reason to hire and order more inventory, the best stimulus we could have.”
The NFIB Small Business Confidence Index is a composite of 10 seasonally-adjusted components based on questions on: plans to increase employment; plans to make capital outlays; plans to increase inventories; expect improvement in the economy; expect higher real sales; current inventory; current job opening; expected credit conditions; whether now is a good time to expand, and earnings trend.
The net percent of owners expecting better business conditions in six months was 16 percent, up six points from September, but still 26 points worse than the beginning of the year. In other findings, nine percent plan to increase employment over the next three months, down two points from September, while 12 percent plan to reduce their workforce (unchanged).
Twenty-six percent of the owners indicated “poor sales” as their top business problem. The Index found 30 percent reported lower sales (up one point), while 22 percent reported higher sales (down three points. “This is not a level of economic activity that will support job creation,” the NFIB concluded.
With mild forecasts for holiday spending (the National Retail Federation projects 2.8 percent growth this year), this could have a chilling effect on holiday hiring.
USA Todaycites Small Business Administration’s Office of Advocacy statistics that find small businesses employ half of U.S. workers and have generated 65 percent of new jobs over the past 17 years.
Business owners surveyed by Millionaire Corner in September do not put much stock in President Obama’s jobs plan. More than half (51.7 percent) said it would not produce the desired results, compared to 22.4 percent who said it would succeed. They were exceedingly more pessimistic that Congress and the Obama administration could work together to create a workable jobs plan. Seventy-nine percent believe this will not happen. A mere 6.9 percent felt a bipartisan plan could be achieved.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.