08-29-19 | Economic News

Small Businesses Remain Positive

Seven of 10 Components See Gains

Small Businesses Remain Positive

Among the good news reported by small business owners was that credit conditions are still being highly supportive of growth. When asked if a 100 bps reduction in borrowing costs would change capex plans, only 21% answered "no" and only 12% said "yes."

With a 1.4-point increase, the most recent NFIB Small Business Optimism Index hit 104.7 in July. According to the Wells Fargo Securities Group, "Owners appear to be navigating trade uncertainty well, and are more concerned about finding qualified workers than tariff threats." Seven of the ten components rose including: plans to increase employment (+3) and future capex plans (+1).

The Uncertainty Index dropped 10 points, credited to the deal with Mexico to forego tariffs for now, and plans to raise prices stabilized. Both of those scores increased sharply last month.

The broad-based optimism from small businesses seems to belie some of the distress signals emanating from the bond market. However, the latest escalation with China and ensuing financial market volatility will likely hit confidence in coming months. Owners reported credit conditions are still highly supportive of growth.

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