U.S. Small Businesses Sentiment Fell Slightly in October — NFIB

Optimism among U.S. small-business owners waned slightly in October as short-term economic expectations worsened, according to a survey compiled by the National Federation of Independent Business released Tuesday.

The NFIB Small Business Optimism Index decreased to 98.2 in October from 99.1 in September, below the 99.5 consensus forecast from economists polled by The Wall Street Journal.

“Small business owners are attempting to take advantage of current economic growth but remain pessimistic about business conditions in the near future,” NFIB chief economist Bill Dunkelberg said.

The NFIB survey is a monthly snapshot of small businesses in the U.S., which account for nearly half of private sector jobs. Economists look to the report for a read on domestic demand and to extrapolate hiring and wage trends in the broader economy.

Seven of the 10 components that form the index decreased in October, one increased and two were unchanged.

Expectations for business conditions over the next six months deteriorated again, with the subindex falling four points. “Owners have grown pessimistic about future economic conditions as this indicator has declined 17 points over the past three months to its lowest reading since November 2012,” the NFIB said.

The number of firms reporting positive profit trends decreased three points, being the rise in the cost of materials the main reason for lower earnings.

Around 49% of small-business owners reported job openings that couldn’t be filled, a decrease of two points from September but still historically high.

“One of the biggest problems for small businesses is the lack of workers for unfilled positions and inventory shortages, which will continue to be a problem during the holiday season,” Mr. Dunkelberg said. However, data hint a slight easing of conditions in the labor markets, he said.

Plans to make capital outlays rose three points in October, while the index gauging plans to increase employment remained stable and the measure tracking plans to increase inventory fell slightly, the data showed.

Supply-chain disruptions continued to be widespread, according to the survey. Around 39% of the respondents reported that recent supply-related bottlenecks have had a significant impact on their businesses; another 29% reported a moderate impact; 21% reported a mild impact; and 10% reported no impact.

Price raising activity among small businesses has reached levels not seen since the early 1980s, the NFIB said. The net percentage of owners raising average selling prices increased seven points to 53% in October, with price increases being more frequent in the wholesale, retail and construction sectors.
Source: Dow Jones