Small Business Optimism Slips Again in September

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The National Federation of Independent Business (NFIB) Tuesday morning reported that its small business optimism index for September slipped 0.3 point from 94.4 in August to come in at 94.1. The September reading remains well below the index’s 42-year average of 98.

The four “hard” measures of the index posted mixed results last month. The job creation component rose one percentage point in September to 10%, the job openings component fell six points to 24%, capital spending plans fell one point to 27% and inventory investment plans dropped eight points to −7%.

Some 22% of small business owners reported raising employees’ pay in the past three months. That’s down two points on a seasonally adjusted basis from the August total. Just 14% are planning to raise wages in the next three months, unchanged month over month.

In his comments on the report, NFIB chief economist, Bill Dunkelberg, noted that none of the top issues for small businesses will be addressed this year as politicians are focused on the November elections. He also had some harsh words for the Federal Reserve:

Clearly the stock market loves the Fed, but bloated stock values are not real productive wealth which is created by real investment in plant, equipment, research and infrastructure, weak in this recovery. Even housing with low mortgage rates has not performed up to expectation based on demographics. It has not occurred to the Fed that what meager growth we have had has occurred in spite of government policy, not because of it. The private sector continues to perform poorly in light of the barriers that governments at all levels throw up in its path.

The NFIB reports that 24% of business owners currently have positions open that they are unable to fill (down six percentage points from August) and that 48% said there were few or no qualified applicants for the open positions, unchanged from the prior month’s total.

Business owners said their single most important problem is taxes (22%), government regulations and red tape (17%) or quality of labor (17%). The least important problems are financing and interest rates (1%) and inflation (2%).