The National Federation of Independent Business’s (NFIB) latest Small Business Economic Trends recent report shows that optimism and sentiment among small business owners fell in January 2015.
The Small Business Optimism Index fell 1.3 points in January to 93.9, which is the weakest since February 2014 and also below the historical average of 98.
As we provide CFO services to a variety of small businesses here in the Silicon Valley and the San Francisco Bay area, we have noticed a similar concern in the region in a variety of industries.
NFIB’s chief economist William Dunkelberg wrote in a blog post that:
“The Small Business Optimism Index fell a bit more than one point, not much of a response to stock market turbulence or the Federal Reserve’s move to raise interest rates. The decline in optimism was accounted for by two important index components, expected business conditions in the next six months and expected real sales. Overall, it is unlikely that anything will occur that will raise the spirits of small business owners.”
Even with the decline in small business optimism, hiring and overall spending among small businesses remained solid in January. Here is an excerpt from the summary by CFO Journal of the report:
“A net of 11% of small-business owners said they plan to create new jobs in the coming months, down from a high of 15% in December.”
“Moreover, a seasonally adjusted net 27% of small-business owners reported raising worker compensation, the strongest increase in firms raising pay since 2007.”
“The NFIB’s findings on hiring were similar to those from ADP and Moody’s, according to The Wall Street Journal.”
“Despite a broader trend of corporations slashing spending budgets, firms surveyed by the NFIB continued to make capital outlays at a solid clip and they suggested no planned changes to capital expenditures in the months ahead,” the WSJ wrote. “That is as a rising number of owners said it is a good time to expand.”