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Small Business Optimism Index Falls For Sixth Consecutive Month

Washington, Sep 13 -

Chairman Graves: “Small business owners are very pessimistic and uncertain about the future”

House Small Business Committee Chairman Sam Graves (R-MO) today issued the following statement on the August NFIB Small Business Optimism Index report. The monthly Small-Business Optimism Index dropped for a sixth consecutive month, falling 1.8 points down to a low 88.1.

“This report proves that American small business owners are very pessimistic and uncertain about the future. Small business owners aren’t optimistic because they are facing low consumer demand, on top of tax increase threats and regulatory burdens from Washington. If small businesses are pessimistic and uncertain about the future, they simply will not take the risk of investing and hiring more people. I applaud the President’s acknowledgement from last week’s jobs speech that relief to small businesses is desperately needed in order to address our unemployment crisis, but if we want to jump start hiring, we must remove barriers to job creation for small companies because they have the most potential to be active job creators.

“America’s small businesses create seven of every ten new jobs and they employ just over half of the country’s private sector workforce. Washington can provide an environment for this type of growth by instituting policies that bring about long-term certainty, not quick fixes. House Republicans look forward to working with the President on identifying policies where we can work together to create a better environment for small business job creation; however, I believe that raising taxes on many of the individuals that we need to create jobs, which is what the President proposes, is the wrong approach.”

Highlights of The August NFIB Optimism Index Report:
•Sales remain the largest problem for small firms—a full quarter identifying “poor sales” as their top business problem. The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months lost 1 percentage point, falling to a net negative 9 percent, with more firms with sales trending down than up. Not seasonally-adjusted, 27 percent of all owners reported higher sales (last three months compared to prior three months), down 2 points from the prior month, while 28 percent reported lower sales (unchanged). Expectations for future sales are also in decline, with the net percent of owners expecting higher real sales falling 10 points in August, to a net negative 12 percent of all owners (seasonally adjusted), 25 points below January’s reading. Not seasonally adjusted, 21 percent expect improvement over the next 3 months (down 6 points) and 34 percent expect declines (up 7 points). Owners appear to have lost confidence in the economy and the government’s ability to assist the recovery.

•The net percent of owners expecting better business conditions in six months was a negative 26 percent, down 11 points from July, and 36 percentage points lower than January. A negative 12 percent of all owners expect improved real sales volumes, 25 points worse than January. Only five percent characterized the current period as a good time to expand facilities (seasonally adjusted), down 1 point and 3 points lower than January. Of those reporting higher profits, 45 percent credited higher sales and 5 percent each credited lower materials cost and higher selling prices. Of those reporting negative sales trends, 45 percent blamed faltering sales, 5 percent higher labor costs, 15 percent higher materials costs, 3 percent insurance costs, 8 percent lower selling prices and 10 percent higher taxes and regulatory costs.

•The frequency of reported capital outlays over the past six months rose 2 points to 52 percent of all firms in August, the first improvement in many months. Of those making expenditures, 36 percent reported spending on new equipment (unchanged), 20 percent acquired vehicles (up 3 points), and 13 percent improved or expanded facilities (up 1 point). Five percent acquired new buildings or land for expansion (unchanged) and 10 percent spent money for new fixtures and furniture (unchanged). The percent of owners planning capital outlays in the next three to six months rose 1 point to 21 percent, a recession level reading that has typified the recovery to date.

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