NFIB survey: Small business owners say a better economy is on the way

Small business owners are optimistic about future sales and the economy over the next six months, according to the latest Small Business Optimism Index by the National Federation of Independent Businesses, suggesting they expect to bounce back quickly from the recession.

“Small businesses are navigating the various federal and state policies in order to reopen their business and they are doing their best to adjust their business decisions accordingly,” Bill Dunkelberg, chief economist, NFIB, said. “We’re starting to see positive signs of increased consumer spending, but there is still much work to be done to get back to pre-crisis levels.”

Key findings from the survey include:

  • The index increased 6.2 points in June to 100.6 with eight of the 10 components improving;
  • The NFIB Uncertainty Index was down by 1 point to 81 in June;
  • Earnings have declined to a net negative 35% over the past three months;
  • 13% of owners think now is a good time to expand;
  • Job creation plans increased 8 points to 16%.

“As N.J. small business owners finally see an uptick in business revenues, they are blindsided by the Legislature’s approval of Gov. (Phil) Murphy’s $10 billion borrowing plan,” Eileen Kean, New Jersey state director, NFIB, said. “The business closures were the first threat, and now, tax hikes under discussion are a second threat, making small business owners question their future sustainability.”

The index also found nearly half of owners believe capital outlays will be down in the next six months compared to 22% who say in the next few months.

A negative one-third (-31%) of owners reported they had higher sales in the past three months, down 12 points from May. This indicates reopening the economy has been slow, especially in services sectors like travel, entertainment, salons and more, the survey said. Those who expect higher sales volume after business reopen improved 37 points to 13% of all owners.

Inventory improved in May, with owners reporting a 1 point increase to a net negative 14% and 7% saying they plan to expand (up 5 points from May.)

About 5% of owners have raised their average selling prices and 14% have raised compensation. Nearly 8% of owners said labor costs and 19% said “finding qualified labor” are their biggest business problems.

Among 35% of owners who reported weaker profits, 61% blamed weak sales, 9% said usual seasonal changes, 5% said price changes, 3% said labor costs and 1% said martial costs.