By James Barrie A bout 700 small business owners participated in the survey in May the results show that US small business confidence edged up but there are growing concerns about weak sales growth, which are hurting businesses willing to spend on capital goods and inventory investment. The National Federation of Independent Business (NFIB) released that its small business optimism index rose 0.2 points to a reading of 93.8 last month. Although it was the second straight monthly increase in the index, it remained well below the 42 year average of 98. Worries about weak sales numbers ranked high among small business owners. 14 percent of owners said weak sales were their main business problem, up 3 points from April survey. The share of owners reporting an increase in sales in the past three months unfortunately fell 2 percentage points compared to the prior quarter. The share of owners expecting higher sales was unchanged showing that business owners are remaining very cautious.
Given the pessimism over sales, businesses remained hesitant to increase inventory. There was a decline in the share of owners reporting an increase in inventory as well as those planning to build stocks. “These weak inventory investment readings are consistent with the rather poor performance of consumer spending in the first quarter, leaving owners with excessive stocks and no incentive to add to them,” said the NFIB. 58 percent of small business owners reported capital investment, down 2 points from April. The share of owners planning capital spending in the next 3 to 6 months also fell 2 points. Hiring continues to be a pain point as small businesses continued to report difficulties finding qualified workers for open positions. 56 percent of owners reported hiring or trying to hire, up 3 points, but 48 percent reported few or no qualified applicants for the positions they were trying to fill. While the share of all owners saying they had job openings they could not fill fell two points, it remained at higher levels. 15 percent of owners reported using temporary workers, up 2 points from April and 5 points from March.
“Overall, it appears that labor markets are tightening,” the NFIB said.
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SPOTLIGHT ON BUSINESS • JULY 2016
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