Small Business Owners Still Sporting a Recessionary Mentality

We’re not out of the woods yet… The National Federation of Independent Businesses (NFIB) recently reported that its quarterly Index of Small Business Optimism fell 0.6 points in December to 92.6, closing off the 36th consecutive month of a recessionary reading.


Of the small businesses surveyed, sluggish sales continue to be a primary concern, and the resulting drop in revenue has hampered hiring as well as capital expenditures. Here is a brief rundown of the findings in these three key areas.

On Sales and Inventories:
Though there was a slight uptick in overall consumer spending in the last quarter, most small businesses reported below average sales (36 percent) in the last three months as compared to the previous quarter. Only 18 percent of all owners reported higher sales. In response, many small business owners are liquidating their inventories (23 percent).

On Employment:
With sales leaving much to be desired, job creation has flat lined among those surveyed. Even employment projections for the next three months are paltry: 10 percent plan to increase employment, and 9 percent plan to reduce it, which translates to a seasonally adjusted net 6 percent of owners planning to hire new employees.

On Capital Spending and Outlook:
Like employment, businesses have been holding back on their capital investments. The percentage of those making capital expenditures over the past six months has dropped four points to 47 percent. Of those businesses, 35 percent spent money on new equipment (unchanged), 15 percent purchased vehicles (down four points), 11 percent improved or expanded facilities (down one point), 4 percent acquired new buildings or land for expansion (unchanged) and 8 percent spent money for new fixtures and furniture (down four points).

Even future capital expenditures will be subdued, with only 21 percent of business owners reporting that they plan of making capital outlays over the next few months.

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