American small-business owners are not optimistic about the current state of the economy.
"The National Federation of Independent Business Index of Small Business Optimism fell 2.2 points to 89.3 - a recession-level reading, and the lowest index reading since 1980," said NFIB chief economist William Dunkelberg. "But the current low readings have not been accompanied by the declines in real spending and hiring, as was the case in past recessions."
There was a modest decline in employment in May (seasonally adjusted). Six percent of the owners increased employment by an average of 4.7 workers per firm, and 16 percent reduced employment an average of 2.9 workers per firm, virtually identical to the April numbers.
Forty-three percent of those surveyed hired or tried to hire (down 5 points), and 77 percent of those trying to hire reported few or no qualified applicants for the job openings they were trying to fill. Fifteen percent (seasonally adjusted) reported unfilled job openings, down six points from April (the 34-year average is 22).
"That is an indication that the unemployment rate will rise," Dunkelberg said. "Eight percent of owners reported the availability of qualified labor was their top business problem, much lower than last September (the Fed's first economic warning and rate cut) when openings stood at 25 percent of all firms, and 17 percent reported the availability of qualified workers was their top business problem."
Over the next three months, 16 percent plan to create new jobs (down three points), and 8 percent plan workforce reductions (up two points), yielding a seasonally adjusted net 2 percent of owners planning to create new jobs - down three points from April.
Plans to make capital expenditures over the next few months fell one point to 25 percent.
More firms are reporting deteriorating sales trends than sales gains, quarter over quarter.
"Clearly the economy is weak compared to six months ago," Dunkelberg said.
NFIB survey shows declining optimism among small businesses
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