The Index of Small Business Optimism in October posted no change after a rise of only 0.2 points in September and 0.5 points in August. The National Federation of Independent Business’s index is holding at a below average reading of 96.1.
While labor market components posted minor declines, they held at historically strong levels, NFIB said. “This time owners reported no net growth in employment, a significant decline from reports in the previous four months.”
Three percent of respondents said all their borrowing needs were not satisfied, up 1 point from the record low reached in September. Those who reported all of their credit needs were met held at 30%, and 53% stated they did not want a loan. “For most of the recovery, record numbers of firms have been on the ‘credit sidelines,’” the organization said. “Interest rates are low, but prospects for putting borrowed money profitably to work have not improved enough to induce owners to substantially step up their borrowing and spending. Owners can’t find many good reasons to borrow to invest when expectations for growth are not very positive.”
Only 2% identified financing as their top business problem, and owners reporting that they borrowed on a regular basis went down one point to 28%. The average rate paid on short maturity loans rose 30 basis points to 5.1%. The net percent of owners expecting credit conditions to ease in the coming months was a negative 5%, a 1 point improvement.
“The October NFIB survey gave no indication of resurgence in growth in the small business sector with the Index remaining below the 42 year average of 98,” said Bill Dunkelberg, NFIB chief economist. “The labor market components might have held at historically strong levels, but this time owners reported no net growth in employment, which is a significant drop from reports in the previous four months.”
- Diana Mota, NACM associate editor