Small business confidence grew slightly in May, survey finds
Small business confidence grew slightly in May, the second highest reading since the recession started, according to a survey from the National Federation of Independent Business.
The NFIB Index of Small Business Optimism rose 2.3 points to 94.4, edging up for the second consecutive month. However planned job creation fell a point and reported job creation stalled after increasing over the last five months.
“Small business confidence rising is always a good thing, but it’s tough to be excited by meager growth in an otherwise tepid economy,” Bill Dunkelberg, NFIB chief economist, said in a statement.
“The unemployment rate remains in the mid-7s and it is departures from the labor force — not job creation — that is contributing to its decline when it does fall. It’s nice to see confidence not shrinking, but there isn’t much to hang your hat on in this report.”
Some 47% of business owners hired or tried to hire workers in the last three months and 38% reported few or no qualified applicants for open positions.
“So, employment reductions continued to fade,” the survey report said. “But hiring failed to hold up its end of the job creation picture.”
About 13% of small businesses reported using temporary workers, little changed over the last 10 years, the survey found, even as the healthcare law provides incentives to boost the use of temporary and part-time workers.
The top three most important problems small businesses said they faced were taxes, government requirements and red tape, and poor sales.
About 16% said weak sales were their top concern, a high number, but better than the record 34% reading last reached in March 2010, the report said.
The number of merchants reporting nominal sales in the last three months compared to the previous three months was unchanged at minus-4%. It was the best reading in nearly a year, but more small businesses still reported declines than gains.
“There are many head winds for growth, the most important being consumer spending. Nothing encourages hiring and inventory and capital investment more than growth in customers and spending,” Dunkelberg said. “Consumer sentiment is up some, but not really supported by income growth or new jobs.”
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