Consumer Payment Card News

Small Biz Surge Joins the Economic Optimism Pep Rally

Small Business Optimism

The small biz surge has joined the economic optimism pep rally in May following a stressful and bizarre start for 2019, created largely by the hurtful Trump Shutdown. The latest surveys are showing small business owners as well as consumers are feeling better about the short-term.

Small business owners indicate sales, hiring and investment expectations are all good except they are frustrated finding qualified workers. Consumers are largely optimistic too, but concerned with taking on debt for major purchases should the jobs market unwind. Rising tariffs (taxes) are a growing concern as prices for major purchases will likely increase in the second half of this year, notes Robert McKinley, Senior Analyst for CardTrak, CardData and CardFlash.

Small Business May 2019

The latest small business survey from the National Federation of Small Business (NFIB), reveals small business optimism rose 1.5 points in May, surpassing pre-shutdown levels. Six components in the NFIB’s Small Business Optimism Index improved, three were unchanged, and one dipped.

The NFIB survey found small business owners reporting capital outlays increased six points to 64%, the highest reading since February 2018. The net percent of owners expecting higher real sales volumes rose three points to a net 23% of owners. A net 16% expect better business conditions, up three points, and 30% say now is a good time to expand, a five-point increase. About 62% reported hiring or trying to hire (up 5 points), but 54% (up 5 points) reported few or no qualified applicants for the positions they were trying to fill.

The NFIB survey discovered the net percent of owners raising average selling prices fell 3 points to a net 10%, seasonally adjusted. Seasonally adjusted, a net 20% plan price hikes (down 1 point). While 11% reported cutting selling prices, only 2% plan to do so, suggesting that most price cutting is an unanticipated, unplanned response to market conditions.

Two percent of small business reported financing was their top business problem (unchanged) compared to 16% citing taxes. The percent of owners reporting paying a higher rate on their most recent loan was 12%, down 1 point. Thirty-one percent of all owners reported borrowing on a regular basis (unchanged).

Consumers May 2019

Meanwhile, the Conference Board Consumer Confidence Index improved in May, following an increase in April. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 169.0 to 175.2. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – increased from 102.7 last month to 106.6 this month. Consumers stating business conditions are “good” increased from 37.6% to 38.3%, while those saying business conditions are “bad” decreased from 11.3% to 10.2%.