Optimism for future success among small business owners had been on the rise for some time, but it seems that this positive feeling dwindled somewhat last month. There may be a number of reasons that this was the case.
In all, the Optimism Index for owners of smaller companies slipped to a rating of 95, down from 96.6 just a month earlier, according to the latest data from the National Federation of Independent Business. This came despite the fact that many companies see their chances to make more hires in the coming months.
“The only two index components that increased in June were labor market indicators: the percent of owners with job openings and the percent planning to create new jobs in the coming months,” said NFIB chief economist Bill Dunkelberg. “While reports of actual net job creation per firm were positive, consumer and business owner optimism remain low, with both spending growth and sales expectations weak. This means there are more jobs but not much more output. With election day months away and no sign of change in Washington, economic growth for the rest of the year will continue to be sub-par. The unemployment rate will fall more due to people leaving the labor force than to jobs being created and fewer hands making GDP.”
Job creation remains a focus among owners
However, the number of companies that apparently plan to hire more workers going forward is now at the highest level seen since 2007, before the onset of the devastating recession, the report said. On a seasonally adjusted basis, 12 percent of companies said they planned to do this, up from 10 percent a month earlier. In fact, without adjusting for seasonal changes, the number is actually 18 percent, but had fallen from May’s 21 percent. Only 5 percent of those polled say they plan to cut jobs.
In addition, June marked the ninth straight month in which hiring increased, rising a seasonally adjusted 0.05 workers per company, the report said. This was driven primarily by 12 percent of owners who hired 3.3 workers each.
Owners who want to best position their companies for success might want to think about the ways in which they can reduce expenses. One way they might be able to do so is by cutting their costs for small business insurance – including commercial insurance – which can save them thousands annually.