After surveying 740 randomly selected member companies, the National Federation of Independent Business reported a drop in its Index of Small Business Optimism for June. The index fell three points to 91.4 after several months of improving or steady performance. NFIB says that only one of the 10 indicators they use – positive credit conditions – showed an upward change from May to June.

June 2012 NFIB Index of Small Business Optimism
June 2012 NFIB Index of Small Business Optimism

“All in all, this month’s survey was a real economic downer,” says NFIB chief economist William Dunkelberg, citing political uncertainty as a primary cause for small business owners’ concerns. “The economy has definitely slowed; job growth will be far short of that needed to reduce the unemployment rate unless lots of unemployed leave the labor force—no consolation. Taxes remain a top concern for the small-business community. With the Supreme Court’s endorsement of the individual mandate as a tax in its health care decision, we will have to wait for July’s survey to realize the effect it will have on small-business confidence.”

Remodeling Focus

Interestingly, the fact that small business owners expect credit conditions to improve could account for remodelers’ current level of optimism. In its Q2 report, the National Association of the Remodeling Industry says 50% of NARI members forecast stronger sales growth for the next three months due to low interest rates. For small-business owners overall, NFIB says only 29% of its respondents expect improved sales over the next three months (down 7 points, not seasonally adjusted). Another 25% expect declines (up 4 points).

Whether sales improve or not, NFIB does not expect improved job creation in the near future. For June, the Index posted its first negative reading in this segment since December with a 0.1-point drop in employment per firm. Seasonally adjusted, 9% of owners added 2.6 workers per firm over the past few months, while 12% reduced employment by an average of 2.8 workers. The majority of owners (79%) made no net change in employment.

Additionally, 44% of owners said they hired or tried to hire in the last three months, and 33% reported few or no qualified applicants. This echoes remodelers’ recent struggles, noted anecdotally in conversations with Remodeling editors and on the magazine’s Facebook page.

How do you feel about your business's trajectory for the second half of 2012? Are they in line with these reports? Share your thoughts in the comments below, or visit our Facebook page.

Find the full NFIB Index of Small Business Optimism here. For a copy of the NARI survey, send a request to