Small-business owner confidence did not rebound in December, according to the National Federation of Independent Business Small Business Optimism Index.
While owner optimism crept up 0.5 over November’s historically-low report, the 88-point reading still was the second lowest since March 2010.
December’s poor report resulted largely from a deterioration of labor market components, and the surprising percentage of owners who still expect business conditions to worsen in the next six months.
State-specific data isn’t available, but Rosemary Elebash, state director of NFIB/Alabama, said what’s happening here mirrors what’s happening nationally.
“Congress played chicken right up to the end of the year, so small-business owners didn’t know whether they’d have to pay higher taxes or whether we’d all plunge over the fiscal cliff,” she said. NFIB/Alabama is the state’s leading small-business association.
“The 11th hour ‘deal’ has brought marginal certainty about tax rates and extenders and will provide some relief to owners, but it certainly doesn’t guarantee a more positive forecast for the economy,” said NFIB chief economist Bill Dunkelberg.
Seventy percent of owners surveyed characterized the current period as a bad time to expand; one in four of them cite political uncertainty as the top reason. Taxes (23 percent) and regulations (21 percent) rank as the top two business problems, with “poor sales” as a close third (19 percent).
Other highlights of December’s Optimism Index include:
n Sales: Small-business sales showed improvement, with the net percent of all owners reporting higher nominal sales over the past three months improving 5 points.
n Job creation: Job creation in December was essentially zero, although it improved infinitesimally from the November report. Eleven percent of surveyed owners reported they added an average of 2.9 workers per firm over the past few months, and 13 percent reduced employment by an average of 1.9 workers. The remaining 76 percent of owners made no net change in employment.