Main Street Monday – Small Business Optimism Improves in Anticipation of Better Economic Outlook

July 20, 2020

By: Caity Witucki
Contributing Editor, Main Street Monday

Main Street Monday – Small Business Optimism Improves in Anticipation of Better Economic Outlook

According to a recent study conducted by NFIB, small business owner optimism increased by 6.2 points in June to 100.6. Notably, the study found that owners anticipate improving sales as the economy continues to reopen with expectations rebounding to a net 13% after April’s lowest reading in survey history (a net negative 42%). Small business owners continue to be optimistic about future business conditions and indicate they expect the recession to be short-lived.

Here are the highlights from the study:

  • The NFIB Uncertainty Index decreased one point in June to 81.

  • Earnings trends over the past 3 months declined to a net negative 35%, the lowest reading since March 2010.

  • The percentage of owners who think now is a good time to expand improved 8 points to 13% of owners.

  • Job creation plans increased 8 points to a net 16%.

  • Down from May, 48% of owners reported capital outlays in the next 6 months, the lowest level since December 2010. Of those making expenditures, 32% reported spending on new equipment, 18% acquired vehicles, and 14% improved or expanded facilities, 5% acquired new buildings or land for expansion and 9% spent money for new fixtures and furniture.

  • A net negative 31% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down 12 points from May.

  • Also improving from May, the net percentage of owners reporting inventory increases went up 1 point to a net negative 14%.

  • Seasonally adjusted, the net percentage of owners raising average selling prices rose 9 points to a net negative 5%. Price hikes were the most frequent in retail (12% higher) and wholesale (18% higher).

  • A net 14% (seasonally adjusted) reported raising compensation, well below the 36% reading in February prior to the pandemic.

  • 19% of small business owners listed “finding qualified labor” as their top business problem.

“Small businesses are navigating the various federal and state policies in order to reopen their business and they are doing their best to adjust their business decisions accordingly,” says NFIB Chief Economist Bill Dunkelberg in response to the new data. “We’re starting to see positive signs of increased consumer spending, but there is still much work to be done to get back to pre-crisis levels.”