NFIB small business optimism index slips in August

Small business sentiment in the US deteriorated in August, according to the National Federation of Independent Business.

The small business optimism index fell to 103.1 from 104.7 in July, hitting its lowest level in five months and a touch below consensus expectations of 103.5.

NFIB President and chief executive officer Juanita D. Duggan, said: "In spite of the success we continue to see on Main Street, the manic predictions of recession are having a psychological effect and creating uncertainty for small business owners throughout the country.

"Small business owners continue to invest, grow, and hire at historically high levels, and we see no indication of a coming recession."

NFIB chief economist William Dunkelberg said the August report does not show a sign of inflation or reflect what the Federal Reserve has noted.

"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."

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the headline was dragged lower by declines in expectations for the economy and business sales, down eight points and five points respectively.

"These indexes are much more volatile than the other components of the headline index, and they are heavily influenced by the performance of the stock market," he said.

"The imposition of new tariffs on imported Chinese consumer goods and the promise of increases in existing tariffs can’t have helped, either. The good news - relatively- is that capex plans rose a point, though the trend remains weak and continues to signal a clear downshift in business investment through the end of this year and into early 2020. Selling prices fell by five points, of which only two points can be attributed to the drop in gasoline prices over the past month. In other words, gasoline-adjusted prices fell three points, but the trend remains upwards and we expect clear increases over the next few months as the tariffs on consumer goods work their way through the supply chain."