The latest Small Business Optimism Index (January 2013), published monthly by the National Federation of Independent Business (NFIB), shows that business owners are getting slightly more optimistic about the year ahead — but just barely. Results are drawn from a sample of about 4,000 small business owners surveyed in December.
Here’s a snapshot of what’s happening with Main Street businesses now:
Small-business sales showed some improvement, with the net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months improving 5 points, but rising only to a negative 10%. Seasonally unadjusted, 18% of all owners reported higher sales (last three months compared to prior three months, down 1 point), and 30% reported lower sales (down 1 point).
- Consumer spending remains weak, especially on services although auto sales have recently shown some strength. The net percent of owners expecting higher real sales volumes rose 3 points to a negative 2% of all owners (seasonally adjusted), 14 points below the 2012 high of net 12% reached in February. Not seasonally adjusted, 20% expect improvement over the next 3 months (up 1 point) and 40% expect declines (down 3 points).
Job creation in December was essentially zero, although it improved slightly from the November report. The average change in employment per firm increased to 0.03, up from -0.04 workers, with 11% of surveyed owners (up 1 point) reporting they added an average of 2.9 workers per firm over the past few months, and 13% reducing employment (up 1 points) an average of 1.9 workers (seasonally adjusted). The remaining 76% of owners made no net change in employment.
- Forty-one percent of the owners hired or tried to hire in the last three months and 33% (80% of those trying to hire or hiring) reported few or no qualified applicants for open positions. Sixteen (16) percent of all owners reported they had hard-to-fill job openings, a drop of 1 point from the previous month. Job creation plans weakened substantially, falling 4 points and indicating that only (a net) one percent of owners plan to increase employment in the months to come. Not seasonally adjusted, seven percent of owners plan to increase employment at their firm (down 4 points), but 11% plan reductions (down 2 points).
Desire for new lines of credit is weak among small-business owners; 52% explicitly said they did not want a loan (65% including those who did not answer the question, who are assumed to be disinterested in borrowing). Six percent of owners surveyed reported that all their credit needs were not met, unchanged from November, and 29% reported all credit needs met. Only one percent of owners reported that financing was their top business problem, tied for the lowest reading in survey history. Twenty-nine (29) percent of all owners reported borrowing on a regular basis, down 1 point from November.
- A net nine percent of small employers reported that loans are now “harder to get” when compared to their last attempt (asked of regular borrowers only), also unchanged from November. The net percent of owners expecting credit conditions to ease in the coming months was a seasonally adjusted negative 11% (more owners expect that it will be “harder” to arrange financing than easier), 1 point worse than in November.
Capital spending remained in “maintenance” mode—historically low—and plans to make capital outlays remained at recession levels. The frequency of reported capital outlays over the past six months fell 1 point to 52%. The percent of owners planning capital outlays in the next three to six months rose 1 point to 20%. Eight percent of owners characterized the current period as a good time to expand facilities (up 2 points), but the net percent of owners expecting better business conditions in six months was a net negative 35%, unchanged from November’s sharp decline.
- Not seasonally adjusted, 11% of owners expect an improvement in business conditions (up 2 points), and 45% expect deterioration (down 4 points). A net negative 2% of all owners expect improved real sales volumes, up 3 points. Overall, there was no sign that capital spending might be returning to levels more consistent with past recovery periods.
Filed Under: Trends
About the Author: Daniel Kehrer, Founder and Chief Content Officer of BizBest Media, is a senior-level leader in digital media, content development and online marketing with special expertise in startups, SMB, social media and generating traffic, engagement and leads. He holds an MBA from UCLA/Anderson and is a passionate entrepreneur (started 4 businesses), syndicated columnist, blogger, thought leader and author of 7 business and financial books.