Weak Sales Deflate Business Owners’ Optimism: Survey

Small business owners’ pessimism the U.S. economy seems to be rising temperature. For the second month in a , the Small Business Optimism Index declined, according to a monthly by the National Federation of Independent Business.

“Optimism fell last year at the same , but not like this,” said William Dunkelberg, chief economist the NFIB. The index was three points in June, after a one-tenth of a point decline in May.

Hiring small business owners remains weak, according the survey. construction and manufacturing saw increases, overall, the index saw a three-point decrease the survey from May. Nine percent of the owners adding average of 2.6 workers per firm over the past months, and 12 percent reduced employment an average 2.8. The remaining 79 percent of owners no change in employment.

Capital spending, , was down, with a three-point decrease from May, as 52 percent of respondents said have purchased equipment, vehicles, or facilities over the six months. In 2007, number was 60 percent.

However, said Dunkelberg, the salient indication that optimism will not increase soon is the sales number — down 7 points in past three months. “That drives everything,” he said. “Profits, the need to hire, funds making capital expenditures. Without sales, you have of that.”

Weak sales were cited 23 percent of respondents as their biggest business problem; 28 percent reported lower sales the past three months, while 26 percent said had higher sales.

The survey, was sent to members in early June, measured, for the part, the sentiments of 740 small business owners before the Supreme Court’s ruling the health-care mandate, which many small business owners said would create an extra burden if they had to provide health insurance all employees. The NFIB was a plaintiff the case that went the Supreme Court in March, arguing that the individual mandate was unconstitutional. The court in late June that the mandate was constitutional, calling it a tax.

“The predominant view business owners is that Obamacare is good, and they were hoping a decision that would take it apart, at the mandate part,” said Dunkelberg, who said that the court’s decision had little effect this month’s survey, but predicted it will depress the optimism index in the months .

Is there anything that could push business owners to reverse course now and November? Dunkelberg said that a stagnant Congress and the economic situation in Europe don't Main Street a lot of reason to hope things will change anytime .

“Washington keeps nothing. There are two strong sides, and keeps the other from doing anything. Washington is paralyzed, and Europe is falling ,” he said.

While real estate could continue its trend in some markets, and profitability might hold in some sectors, the overall economy is going to continue seeing and starts, he said.

“We’re going to be pessimistic November, when we see what the voters say and what we’re going to be on," he predicted. "Then, we may still be pessimistic, but at least know what direction we’ll be .”


Adapted from: CNBC, July 10, 2012.