The National Federation of Independent Business' monthly Index of Small Business Optimism rose two-tenths of a point in May to 93.8, a negligible increase showing no real enthusiasm for making capital outlays, increasing inventories or expanding, according to an NFIB news release.
"The bottom line is that without an empowered small business sector, the economy will grow at a mediocre pace," said NFIB Chief Economist Bill Dunkelberg in the release. "Politicians in Washington credit any insignificant growth in the economy to their policies, but realistically, it's the increase in the population. At this point, we should expect the same slow growth for the rest of the year."
State-specific data isn't available, but Brad Jones, NFIB's state director, said the national trends are reflected here. "There's not a lot of optimism about the direction of the economy," he said. NFIB is the state's leading small-business association.
At 93.8, the index remains well below the 42-year average of 98. Four of the 10 index components posted a gain, four declined and two were unchanged. The biggest increase was in expected business conditions, which rose five points - a good sign but still nine percentage points below last year's reading.
Owners are still reporting they cannot find qualified workers and cite it as their fourth "single most important business problem." Earning trends among small businesses fell another point and sits at a dismal reading of negative 20. The political climate continues to be the second most frequently cited reason for why owners think the current period is a bad time to expand.
"Almost every month the administration announces another big regulation that makes it harder to run a business," said Juanita Duggan, NFIB president and CEO, in the release. "Mix in the presidential election, which is a wild card, and weak sales, and it's easy to see why small business owners are reluctant to make big bets right now."
NFIB's monthly Small Business Economic Trends survey is based on a monthly survey of small businesses. The survey was conducted in May and reflects the response of 700 small businesses.
For a copy of the full survey, please visit NFIB.com/optimism.