Small-business optimism remained flat in August, dropping 0.1 points from July for a final reading of 94.0. While the total reading showed essentially no change over the month prior, a look at the individual indicators reveals incongruent details. Job creation plans leapt to a level not seen since before the recession and sales expectations improved; but this optimism would appear to contravene the dramatic deterioration in quarter to quarter sales and profit trends. The favorable employment plans also contrasted sharply with the increasingly negative expectations for improved general business conditions. The month’s performance proved poor, but expectations, pre-Syria, were looking up. ...Small business hiring plans increased in the August survey to a reading of 16 from 9 in July (zero is neutral). This is a very strong reading.
Job Creation. August marked the fourth consecutive month of negative job growth for small-business owners. The average increase in employment for small firms surveyed was negative 0.3 workers per firm. Dramatic employment reductions have ceased but hiring has not resumed at normal levels.
In another small sign of good news, only 17% of owners reported weak sales as the top problem (lack of demand). This was down from 20% a year ago, and half the peak of 34% during the recession. During good times, small business owners usually complain about taxes and regulations - and those are now the top problems again.
Click on graph for larger image.This graph shows the small business optimism index since 1986. The index decreased to 94.0 in August from 94.1 in July. This is still low, but just below the post-recession high.
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