Don’t look for small business to give the economy a shot of adrenaline anytime soon.
A survey by the advocacy group National Federation of Independent Business taken last month found that small business owners are scaling back their plans to invest in equipment and property and build their inventories. They have fewer job openings.
The survey, which questioned 700 of the group’s members, is in line with others this year that have shown business owners’ optimism about the economy sagging and their anxiety about their companies rising. Many are holding off hiring.
The NFIB’s Small Business Optimism Index was virtually unchanged in May, up just 0.2 from April to 93.8.
The number of owners who plan to make investments in their companies for equipment or property fell 2 percentage points, and the number planning to increase inventories — which means stepping up production — fell 1 percentage point. The number of owners who currently have job openings fell 2 points.
Many owners have said in surveys they won’t hire unless their revenue can justify the added expense and risk of taking on new staffers. The NFIB survey found that only 1 per cent of owners expect their sales to rise in the coming months.
Company owners are likely to remain conservative for the rest of the year and that in turn will keep the economy growing at a mediocre pace, NFIB Chief Economist William Dunkelberg said. The gross national product expanded at a sluggish annual rate of 0.8 per cent in the first quarter. The current quarter looks to be stronger, but, Dunkelberg said, the first quarter reading “is not much of a hurdle to get over.”
Some surveys have found that owners are cautious not only because of the economy, but also because they are waiting to see the results of the November presidential election. Uncertainty, no matter what its source, discourages many small businesses from taking chances.
Follow Joyce Rosenberg at www.twitter.com/JoyceMRosenberg . Her work can be found here: http://bigstory.ap.org/content/joyce-m-rosenberg