Small businesses hiring and spending less but expecting more
Don’t look to small businesses for a vote of confidence in the economy. Pessimistic owners are scaling back hiring plans, rethinking expansion and fretting over weak sales as they wait for stability.
An optimism index from the National Federation of Independent Business slipped slightly to 92.8 in September from an August reading of 92.9.
Hiring plans plunged as fewer owners hired and more slashed head counts. Job creation in September lagged the previous two months.
Capital outlays over the last six months slipped, with fewer owners reporting spending on new equipment, vehicles and property. The number of small businesses planning to spend in the next three to six months also fell.
Sales “continue to be an albatross,” with more than one in five small business owners blaming weak sales as their top problem. Overall, the biggest obstacle are rising healthcare costs, followed by uncertainty over economic conditions and then energy costs.
Consumers are struggling, with many forced to dip into their savings as high food and energy prices pressure their disposable income reserves.
Customer belt-tightening and election-related uncertainty have put business owners in “maintenance mode” -- a sort of purgatory state where Main Street tries to keep things going while waiting for the environment to worsen or improve, according to the federation.
“Uncertainty has cast a cloud over the future for small business owners, making it difficult to make commitments to new spending and hiring,” said William Dunkelberg, chief economist for the federation, in a statement.
But one promising detail emerged: An index measuring expectations for better business conditions in the next six months increased to +2, giving the measure its first positive reading in a year and a half.
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