Small Business Optimism Down but Still Positive in August

Washington, DC, September 10, 2019--The NFIB Small Business Optimism Index fell 1.6 points to 103.1 in August, remaining within the top 15% of readings. Overall, August was a good month for small business. However, optimism slipped because fewer owners said they expect better business conditions and real sales volumes in the coming months. Job creation accelerated, positive earnings trends improved, and quarter-on-quarter sales gains remained strong.

“In spite of the success we continue to see on Main Street, the manic predictions of recession are having a psychological effect and creating uncertainty for small business owners throughout the country,” said NFIB president and CEO Juanita D. Duggan. “Small business owners continue to invest, grow, and hire at historically high levels, and we see no indication of a coming recession.”

The Uncertainty Index rose four points in August, suggesting that small business owners are reluctant to make major spending commitments. In fact, the main impediment to more growth is the record level of no qualified workers.

Capital spending posted strong improvements in August with 59% of owners reporting capital outlays, up two points from the month before. Of those making expenditures, 42% reported spending on new equipment, 24% acquired vehicles, and 18% improved or expanded facilities. Four percent acquired new buildings or land for expansion, while 15% spent money for new fixtures and furniture.

Twenty-eight percent are planning capital outlays in the next few months. Plans to invest were the strongest in manufacturing (35%), agriculture (30%), and wholesale trades (30%).

Owners raising average selling prices fell five points to a net 11% (seasonally adjusted), reversing July’s seven point surge. Price hikes were the most frequent in wholesale trades (14% lower, 30% higher), the sector most likely to feel the effects of tariffs.