U.S. small business optimism worsens in August

The National Federation of Independent Business (NFIB) reported on Tuesday the Small Business Optimism Index decreased by 1.6 points to 103.1 in August, reversing a 1.4-point gain posted in July.

The August decline in the headline index was attributable to a drop in expectations for business conditions and real sales volumes in the coming months. Meanwhile, job creation accelerated, positive earnings trends improved, and q-o-q sales gains remained strong.

According to the report, six of 10 index components declined, three rose and one was unchanged. It also revealed that small business owners’ plans to create new jobs and increase inventories decreased slightly, while their plans to make capital outlays increased.

“The August report does not show a sign of inflation or reflect what the Fed has noted,” said NFIB Chief Economist William Dunkelberg. “The pessimism we’re seeing is contagious, even though the actual economy is thriving. Expectations can be infected and, as a result, could turn sour. All the talk about an impending recession can create a false reality, but it doesn’t make it right. Main Street is continuing to produce and remains strong in spite of the headlines.”