Looming Recession? Not According to Latest Survey of Small Business Sentiment
If recession is lurking, small business owners aren’t the harbingers just yet.
Their optimism has grown since dimming in the first three months of the year, according to a monthly index from the National Federation of Independent Business.
The index registered 104.7 for July. A rating above 100 indicates that business is looking up and below 100 means small business owners have a more pessimistic view about their prospects and the economy. It dropped to nearly 80 during the last recession.
Though not as high as 107.9 this time last year, optimism is clearly better than the first three months of the year, when the index started to approach the 100 mark.
When small business owners have an optimistic view, they add jobs as well as invest more in their businesses. That’s good for commercial real estate of all kinds.
“Happy small business owners make for happy landlords,” said David Koziak, a broker with real estate firm Savills North America. “They are typically easier to accommodate for landlords.”
According to the official report on the index, small businesses increased their capital spending last month, which included expanding or improving existing facilities.
Job growth, however, has slowed, chiefly because business owners continue to struggle with finding workers. The index showed 26% of those responding to the survey reported hiring qualified people as their top problem, a 46-year high for the index.
“Small business owners want to grow their operations, and the only thing stopping them is finding qualified workers,” Juanita Duggan, CEO at the National Federation of Independent Business, said in a statement.
Earlier this month, the monthly Paychex | IHS Markit Small Business Employment Watch showed that hiring continued to slow in July, with its national index dropping to 98.18. The index has been declining at its fastest rate since 2009.
Paychex culls the information from the payroll company’s 350,000 clients. While job growth has slowed, wages continue to increase, which isn’t surprising in a tight labor market, Martin Mucci, Paychex’s president and CEO, said in a statement.
