Weak sales is still the reported No. 1 business problem for 22 percent of small business owners surveyed by the National Federation of Independent Business (NFIB) in its influential monthly Small Business Optimism Index. The October index rose 0.3 to 93.1 but NFIB said, the "slight uptick in the reading did not seem to indicate a dramatic shift in owner sentiment over the course of the month."
The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months is negative 15 percent, 2 points worse than September, confirming the weak growth in non-durable consumer spending in the third quarter, NFIB said.
Seasonally unadjusted, NFIB said 18 percent of all owners reported higher sales (last three months compared to prior three months), down 5 points and 29 percent reported lower sales, down 1 point.
Consumer spending remains weak and high energy costs diminish consumer disposable income, NFIB said. The net percent of owners expecting higher real sales rose 2 points to three percent of all owners (seasonally adjusted), down nine points from the year high of net 12 percent in February. Not seasonally adjusted, 25 percent expect improvement over the next three months (up 1 point) and 34 percent expect declines (up 3 points), NFIB reported.
The NFIB survey, conducted before the presidential election, found that the percent of owners uncertain about whether business conditions will be better or worse in six months, was at a record high (23 percent). This eclipsed the pre-recession record of 15 percent reached during the Carter Administration, NFIB said. NFIB’s forward labor market indicators weakened in October and owner views of the future "do not foresee much improvement in economic growth," NFIB said.
“While four of ten survey components rose, the Index still remains in solidly pessimistic—and recessionary territory,” said NFIB chief economist William Dunkelberg. “In the 40 months since the alleged ‘recovery’ started in July 2009, the Index has never exceeded a reading of 95; the pre-recession average for the Index is 100. "
"The election is over and Washington looks much like it did on November 5. The fear of stalemate among the small-business community is palpable, as the looming fiscal cliff and the threat of higher costs and more taxes are very real possibilities come January. Until then, not knowing the direction of the economy will always have a dampening impact on spending and hiring," Dunkelberg said.
The report is based on the responses of 2,029 randomly sampled small businesses in NFIB’s membership, surveyed throughout the month of October.