The Economy

Small Businesses Expanding But Skeptical

Optimism among small business owners is high, but many don't expect business conditions to get any better in the next six months.
Matthew HellerNovember 11, 2014
Small Businesses Expanding But Skeptical

A measure of small business confidence showed a slight uptick last month but owners are slightly less optimistic about business conditions over the next six months, the National Federation of Independent Business said Tuesday.

The federation’s Small Business Optimism Index crept back to its August level by gaining 0.8 points to 96.1, led by a 4% increase in the number of owners planning to invest in their companies over the next three to six months. That was the second strongest business expansion reading since early 2008 and only a point below the record set in August.

Twenty-four percent of owners also reported having job openings they could not fill, up 3 percentage points, which the NFIB said was “a good sign for improvements in the unemployment rate.” But the net percent of owners expecting better business conditions in six months fell 1% to a negative 3%.

A Better Way to Do Ecommerce

A Better Way to Do Ecommerce

Learn how Precision Medical leveraged OneWorld to cut the cost of billing in half and added $2.5M in annual revenue.

Owners are “making capital investments and trying to fill positions” even if they do not expect a better economy, Bill Dunkelberg, the NFIB’s chief economist, said in a news release. “Basically they’re preparing to taxi the runway but they don’t expect to take off anytime soon.”

The NFIB said the November survey could indicate whether small business optimism has gotten a boost from the Republican gains in last week’s mid-term elections. Twenty-eight percent of owners blame politics in Washington for the country’s economic problems.

The Small Business Optimism Index, which is based on owners’ answers to 10 survey questions, has averaged 98 since the fourth quarter of 1974. Owners this month cited government regulations, taxes and poor sales as their most important problems while financing and interest rates is what they worry least about.

A record low percentage of owners reported problems getting access to capital and an unusually large number of owners said they have no interest in borrowing.

“Owners, for the most part, can borrow all they need but mainly, they’re not interested now in taking on debt because they’re not confident in the future,” Dunkelberg explained.