September 2017 NFIB

Small business optimism remained elevated in September 2017 but suffered a relatively significant loss versus a month earlier.  The National Federation of Independent Business surveys its members each month in an attempt to measure the attitudes of small business owners.  After reaching its highest reading in 12 years in August, this indicator dropped 2.3 points to 103.0 to end the third quarter.

Of the ten components, just three improved while six declined and one remained unchanged.  Two major setbacks occurred in the report.  First, the net number of business owners expecting inflation-adjusted sales to be higher plummeted 12 percentage points to just 15 percent.  Secondly, those describing now as being a good time to expand dropped 10 percentage points to a net of only 17 percent.  Following those two collapsing figures was a five percentage point drop in the net number of respondents planning to make capital outlays, now just 27 percent.

At first glance, it might be easy to dismiss this decline as weather-related, but it does not appear to be the case.  According to Juanita Duggan, NFIB President and CEO, “Small business owners across the country were measurably less enthusiastic last month.”  However, it is important to put this in context: the indicator is just beneath its highest reading since 2005.  In fact, this reading is higher than any month in previous years going back to 2006.

This indicator has been on an upward trend since after the presidential election last year.  Business owners have been optimistic about changes coming out of Washington D.C. that would be friendly to commerce.  September’s downtick might be a result of frustration from the lack of changes to tax and healthcare policies.