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Small-Business Confidence Edges Higher in August

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Small Business Activity Ahead Of Small Business Optimism Report
Daniel Acker/Bloomberg via Getty Images
By Howard Schneider

WASHINGTON -- Small-business optimism edged slightly higher in August as more owners said they expected business conditions to improve in coming months and planned to increase capital spending, according to a survey released Tuesday.

The National Federation of Independent Business said its Small Business Optimism Index rose 0.4 point to 96.1.

Eight of the index's 10 components either improved or showed no change in the survey based on a random sample of 598 small business owners.

The job growth indicated in the survey was sluggish, with owners adding an average of only 0.02 workers per firm, and fewer saying they planned to hire more workers in the future.

Some businesses appeared to lose pricing power, with 15 percent of respondents saying they had reduced prices, and a drop in the number of owners saying they planned price hikes.

Though more owners said they expect an improvement in business conditions than said so in the month before, a slight majority still aren't convinced conditions will improve.

The index is still 4 points below where it was before the start of the 2007 financial crisis and recession, though it has been making progress back toward that level.

Overall the index points to economic growth slightly slower than that expected by many forecasters and Federal Reserve officials.

The results of the survey point to economic growth of around 2 percent this year, not the greater than 3 percent growth cited by other forecasters.

 

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