Small Business Sentiment Slipped in June but Remained High
Washington, DC, July 9, 2019-America’s small business owners’ optimism took a modest downturn in June, according to the NFIB Small Business Optimism Index, slipping 1.7 points to 103.3.
While optimism remains at historically high levels, the June figure reverses the gain posted in May, with six components falling, three improving, and one unchanged.
The Uncertainty Index rose substantially, increasing seven points to the highest level since March 2017.
“Last month, small business owners curbed spending, sales expectations and profits both fell, and the outlook for expansion dampened. When you add difficulty finding qualified workers and harmful state level laws and regulations, you’re left with a volatile mix where uncertainty has increased to levels not seen in more than two years,” said NFIB president and CEO Juanita D. Duggan.
Both capital spending plans and reports of actual spending fell in June, reversing last month’s gains. The inventory component strengthened in June with owners saying existing inventory stocks were lean and planning to add to them. Sales and earnings trends softened, while expected credit conditions remained favorable. More owners expect credit conditions to tighten rather than ease by a two-to-one margin, with most expecting no change.
“As expectations for sales gains and the general business environment faded, uncertainty levels increased,” said NFIB chief economist William Dunkelberg. “Still, job openings and plans to create jobs remain historically very strong, and while it’s not as ‘hot’ as May, Main Street is still running strong.”
Twenty-six percent of owners plan capital outlays in the next few months, down four points, and an indication there is more reluctance to make major spending commitments when the future becomes less certain. Fifty-four percent reported capital outlays, down ten points. Of those making expenditures, 40% reported spending on new equipment (down four points), 22% acquired vehicles (down seven points), and 12% improved or expanded facilities (down seven points).