The National Federation of Independent Business small business optimism index fell 1.6 points to 103.1 in August. Though 103.1 remains within the top 15 percent of readings, fewer owners expect better business conditions and real sales volume in the coming months, according to NFIB.
However, job creation accelerated and quarterly gains were strong.
“In spite of the success we continue to see on Main Street, the manic predictions of a recession are having a psychological effect and creating uncertainty for small business owners throughout the country,” said NFIB President and Chief Executive Officer Juanita Duggan in a statement. “Small business owners continue to invest, grow, and hire at historically high levels, and we see no indication of a coming recession.”
In New Jersey, NFIB State Director Laurie Ehlbeck called the overall picture in the state “very positive.”
“This report shows that when it comes to the small business economic engine, there is no indication of recession, but you still hear that suggestion from naysayers in the news,” Ehlbeck said in a statement.
The NFIB’s uncertainty index rose four points in August, and the main hindrance to more growth is the lack of qualified workers according to 27 percent of owners reporting. Financing was the top business problem for 2 percent compared to 14 percent citing taxes, and 14 percent citing regulations and red tape.
Capital spending was up two points from July with 59 percent of owners reporting expenditures, including 42 percent who reported spending on new equipment, 24 percent who bought vehicles, and 18 percent who improved or expanded facilities.
Twenty-eight percent are planning to spend in the next few months, of which 35 percent work in manufacturing, 30 percent in agriculture, and 30 percent in wholesale trades.
A seasonally adjusted 6 percent of business owners reported higher nominal sales in the last three months, and the August report shows consumer spending as strong and consistent with small business owners’ reports of sales trends.
“The August report does not show a sign of inflation or reflect what the Fed has noted,” said NFIB Chief Economist William Dunkelberg in a statement. “The pessimism we’re seeing is contagious, even though the actual economy is thriving. Expectations can be infected and, as a result, could turn sour. All the talk about an impending recession can create a false reality, but it doesn’t make it right. Main Street is continuing to produce and remains strong in spite of the headlines.”