Is the fear of recession and economic shake-up impacting small business confidence and optimism? The numbers coming from the National Federation of Independent Business (NFIB) reveal that business owners are still feeling secure in today’s economy.
Each month, the NFIB releases a report on the previous month’s small business optimism index, and this past August showed some additional insights into how the last quarter of 2019 could shape up for small business owners.
So, what are your peers experiencing in their industries? Here are the top takeaways from August’s small business optimism index survey:
Consumer Optimism is Still at a Game-Changing High
In comparison from July to August, optimism only fell 1.6 points to still stand at 103.1. Since January 2019, the small business optimism index hasn’t fallen below 101.2. This path month’s index is within the top 15 percent of readings. This data reveals that regardless of the worries concerning a potential recession, small business owners are still confident about the trajectories of their business. This information also shows a disconnect with what is going on regarding the macro outlook and what is happening day-to-day. On the ground, all seems to be well.
Compared to July, capital spending was up two points to rest at 59 percent. Forty-two percent of business owners purchased new equipment while 24 percent bought new vehicles. In addition to those making purchases, 20 percent are planning to make capital purchases in the next three months. As confidence continues to stay steady, it makes total sense that capital purchases would go along with this. If confidence falls, this trend will likely go along with it.
It is Still a Job Seeker’s Market
If you are having a hard time finding qualified workers to fill vacancies, then you are not alone. Finding quality candidates is the number one problem companies are facing. In fact, according to the study, a record 27 percent of small business owners reported that finding qualified employees was their top problem.
Job openings still seem to be exceeding the number of workers looking for jobs. While challenges are facing companies looking to expand their teams, it is encouraging that small businesses have the funds to expand their staff. Also, small business owners seem to be trying to sweeten the deal for qualified workers by offering higher compensation. Even though those offering higher salaries fell three percent when compared to the previous month, many are still using this as a tactic to attract the best.
Consumers are Still Spending
Again, the markets are bright for small business owners as well as customers. According to those included in the survey, six percent of respondents reported higher sales within the past three months. While consumers are likely cautious about the emergence of a future recession, many are still spending.
As a result, companies are having to rebuild their inventories, another helpful sign that the economy is still on the upswing. However, the report also indicates the pricing is also steadily increasing, so consumers may have to contend with higher costs which could eventually cool demand in the next year.
While locating quality labor takes the top spot when it comes to the issue small business owners are the most concerned about; many are also concerned about the government’s relationship with the small business community.
The study revealed that taxes and government regulations were tied as the second most concerning problem for small business owners. It could be an indicator that many of the recent changes to tax law and employee benefits could be negatively impacting small business owners as well as their perception of the government’s role in driving commerce and regulating how business is conducted.
August is revealing that small business owners are still confident in the economy. However, there are some indications that while optimism is still high, there could be some light turbulence on the way. While confidence is steady, it is slightly falling, and sales expectations are also taking a slight dip. It will be telling to see if September follows the same trends, and reveals that more and more small business owners are feeling cautious. Ultimately, optimism index data for the next few months will provide a helpful narrative of what we can expect going into 2020.
Visit this link to read the entire study.
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This has been a JBF Business Media production.