The National Federation of Independent Business (NFIB) Research Center released an industry-specific quarterly Small Business Economic Trends survey highlighting the construction, manufacturing, retail and services industries.
“Small-business optimism showed signs of improving over the last few months. While conditions remain tough overall, owners report feeling positive about the future of the economy, especially in the construction sector,” Holly Wade, executive director of NFIB’s Research Center, said in a release. “While this increase is certainly a positive sign, reports of hiring challenges, low sales, and increasing cost pressures remain significant concerns for small businesses in every industry.”
The survey was conducted in July and the overall Optimism Index in July was 93.7.
Key findings by industry include:
Construction
- The Optimism Index for the construction industry was 98.6, up 6.3 points from the previous quarter and 4.9 points higher than the overall Optimism Index.
- Owners in the construction industry had the highest percentage of unfilled job openings among the four reported industries at 53 percent, down one point from April.
- Fifty-one percent of the job openings in construction are for skilled workers (unchanged from the last quarter) and 18 percent (down one point) are for unskilled labor.
- Fifty-six percent of construction firms reported few or no qualified applicants, down two points from April.
- A net 23 percent of construction firms plan to hire in the next three months, up seven points from last quarter and the highest of the four reported industries.
- Thirty-eight percent of construction firms reported raising their selling prices in July, down 10 points from last quarter.
- Earnings trends in construction fell five points from the previous quarter to a net negative 19 percent.
Manufacturing
- The Optimism Index for manufacturing in July was 92.9, up 3.4 points from April and only 0.8 points below the overall Optimism Index.
- The percentage of firms expecting strong future sales rose one point in July from the second quarter to a net negative 12 percent, the lowest reading among the four reported industries and three points worse than the overall reading.
- A net negative 4 percent of manufacturing firms expect the economy to improve, a 37-point increase from April and three points better than the overall reading.
Retail
- Optimism in the retail sector improved 2.3 points from April. Even so, this sector exhibited the lowest level of optimism among the four reported industries with an industry Optimism Index of 91.3, compared to 93.7 overall.
- The percentage of small firms in the retail industry expecting strong future sales rose five points from July to a net negative 8 percent, one point better than the overall reading.
- A net negative 5 percent of retailers report current inventory levels as “too low,” compared with a net negative 4 percent of all small businesses.
- Retailers are not planning to increase inventory levels. A net negative 4 percent plan to increase inventories over the next three to six months, unchanged from April and six points below all firms.
Services
- The Optimism Index for the services sector was 93.8, up 1.3 points from April.
- A net negative 11 percent of owners in the services industry reported they expect the economy to improve in the coming months.
- In accordance with the overall trend in hiring plans among small businesses, a net 16 percent of small firms in the services sector plan to hire in the next three months, down one point from April. This is one point higher than the overall reading for July.