Small Business Muscles Through
The NFIB Small Business Optimism Index
has been released, and after a brief rattling from the government shutdown, small business anticipates solid growth, full employment, and no signs of a recession in the near future. According to NFIB Chief Economist Bill Dunkelberg, "Owners are growing their businesses and expect that they can sell more if they can produce more with additional employees. Investment spending has been solid for the past two years and owners are choosing to invest in the workforce as well as creating new jobs and raising wages."
Measured in 10 Index Components (see chart below) and benchmarked against the previous month, the four categories that improved are primarily related to optimism for growth driven by increased employment and expansion strategies. Both a challenge and opportunity small businesses continue to face is finding good help with productivity commensurate to wages, but the trends and optimism are improving.
The three categories that show no change from February are driven by investment planning, economic and sales expectations. Sales have improved since the government shutdown, which is a great sign. However, chatter about changes in the economy has small business on alert, and while 60% reported increased capital outlays on fixed assets, only 27% expect new outlays over the next few months.
The weakest results are driven by expected credit conditions and inventory. Most report that their credit needs are met, and despite the net % remaining negative, overall the markets have been supportive of growth. Inventory, however, is reported as excessive, and the percentage of owners planning to expand inventory dropped to -1%. Inventory ties up cash and can be subject to trends. It would be prudent for small business to immediately address this challenge to remain robust.