Small-business owners’ confidence in the overall economy is fading despite strength in their own operations, a sign the recovery’s gains may be slowing.
For August, the portion of small businesses reporting that the U.S. economy was improving fell to its lowest level since the government shutdown of 2013, according to a monthly survey of small firms by The Wall Street Journal and Vistage International Inc. The survey was completed in mid-August, before concerns about an economic slowdown in China triggered a selloff across global markets.
Confidence in the U.S. economy among small-business owners has been declining for much of this year. In the most recent WSJ/Vistage survey, only 42 percent of the 682 small companies surveyed said economic conditions were better than a year ago, down from 47 percent in July and a January peak of 67 percent.
But small-business owners’ waning optimism about the larger economy belies their outlook for their own operations. Fifty-seven percent of small firms surveyed expect their total number of employees to increase over the next 12 months, while 46 percent forecast growth in investment spending. Nearly three-quarters expect higher revenue over the next 12 months and 57 percent forecast profitability to rise.
Luis Alvarez, president of Alvarez Technology Group Inc., a Salinas, CA, information technology services firm with 38 employees that serves small and midsize companies, said he recently added two new employees and forecasts revenue to be up 15 percent this year, based on the firm’s performance in the first half of 2015.
His clients’ spending plans for the next 18 to 24 months have fueled his optimism. “They haven’t told us that economic conditions are making them pause,” he added. “Many of them are taking advantage of the cheap financing available to accelerate their growth, which means our growth is accelerating with them,” he said.
Read the full story in the Wall Street Journal.