Small Business Optimism Falls

The small business optimism index fell 0.3 points in September to 94.1, posting the second consecutive monthly decline and disappointing expectations of an increase that would resume the weak rebound from the 2-year low at 92.9 set in March. Despite the decline in the overall optimism index, the sharpest move among the components was a very positive one, with the net percentage of business owners expecting better business conditions in the next six months rising sharply by 12 points to 0. But this gain was erased by significantly weaker inventories, with plans to increase inventories falling 8 points from the August level to a minus 7 while current inventories registered an identical 8-point drop also to minus 7.

On the jobs front, current openings optimism weakened but still remained quite strong, with hard to fill jobs dropping 6 points to 24. Plans to make capital outlays thus became the most optimistic of the components in September by falling only a point to a still very solid 27. Besides the rise in the expectations of an overall improvement in the economy, another hopeful positive in the September report is a 5 point increase to 4 in the net percentage of business owners expecting higher sales volumes. But while earnings trends also improved by 3 points, at minus 20 business owners are still the most pessimistic about them of all the components.

Recent History Of This Indicator:
The small business optimism index is expected to rise to 95.0 in September vs 94.4 in August. Job openings have been very strong in this report but small businesses are having a hard time filling them. Capital expansion plans have been another positive. Earnings growth has been on the weak side amid depressed expectations.