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Small Business Optimism Takes A Nosedive

Written by Ken Gaebler
Published: 7/12/2012

NFIB's June Small Business Optimism report shows the most significant dip in small business confidence in two years.

The small business community is mired in uncertainty and sluggish growth according to the latest reports from the National Federation of Independent Business (NFIB) and the Job Openings and Labor Turnover Survey (JOLTS) from the U.S. Department of Labor's Bureau of Labor Statistics.

Small Business Optimism Survey Decline

The NFIB Small Business Optimism Index for June came in at 91.4 -- a substantial drop from May's 94.4 rating for the largest month-to-month decrease in two years and the lowest confidence rating since October 2011. A large share of the decrease is due to losses in labor market indicators, capital spending plans and inventory levels.

The NFIB report also showed that seasonally adjusted planned job creation among small business owners fell 3 points to 3%, marking a reversal of a three-month trend of increases in planned hiring. The JOLTS report released by the Labor Department did nothing to improve the hiring outlook -- the number of reported job openings and hiring rate remained flat during the month of May. With small business employers lacking confidence in the direction of the economy, it's likely that many will pursue alternatives to hiring employees, at least in the short-term.

Both the NFIB and JOLTS reports seem to be pointing toward an extended period of stagnation in the small business sector. Since the June data didn't include the Supreme Court's decision on healthcare legislation or other recent legislation, it's possible that small business confidence may tumble even further in next month's report.

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