June 15, 2020
By: Caity Witucki
Contributing Editor, Main Street Monday
Main Street Monday – Small Business Optimism Rebounds
According to the most recent National Federation of Independent Business (NFIB) report, small business optimism increased 3.5 points in May to 94.4, a strong improvement from April’s 90.9 reading. Additionally, 8 out of 10 of NFIB’s index components improved in May.
“As states begin to reopen, small businesses continue to navigate the economic landscape rocked by COVID-19 and new government policies,” says NFIB’s Chief Economist, Bill Dunkelberg. “It’s still uncertain when consumers will feel comfortable returning to small businesses and begin spending again, but owners are taking the necessary precautions to reopen safely.”
Here are the highlights from NFIB’s May report:
- 34% of small businesses reported that they expect the economy to improve in the next 6 months (up 5 percentage points from April).
- Earnings trends declined 6 points to a net negative 26%. Among owners reporting weaker profits, 46% blamed weak sales, 12% blamed usual seasonal changes, 9% cited price changes, 4% cited labor costs, and 4% cited material costs.
- 5% of small business owners reported thinking it is a good time to expand (up two points from April).
- A seasonally-adjusted net 8% plan to create new jobs in May. The creation is driven in part by the forgiveness portion requirements of the Paycheck Protection Program.
- 52% reported capital outlays in the last 6 months. Of those making expenditures, 35% reported spending on new equipment, 20% acquired vehicles, and 15% improved or expanded facilities.
- 3% of owners reported that all their borrowing needs were not satisfied. 33% reported all credit needs met and 52% said they were not interested in a loan.
The full May 2020 NFIB report can be downloaded here.